Housing Benefit and letting to parents

Hi Dora,

Has your boyfriend previously charged his parents rent? Is there a tenancy agreement? From what I have read before if rent has not been charged before it is well nigh impossible to try and get Housing Benefit. Other people will be along soon and explain in detail the ins and outs. But in short, I don't think you can suddenly start charging rent then HB.

Also is the house in the name of the parents? If so it is their asset. If they have since sold the house to their son they will have had the money and someone will want to know where that has gone. The reason I mention it is because it is the parents right to buy, not the son's and it was most likely bought in their name but with the son providing the funds. Usually in these cases no money changes hands but the relative benefits from the lower price of the property. Another thing people often do is to sell the property on to a relative after the qualifying period so that in the event of the parent needing to go into a home the Council cannot take the property. So many things to consider but I hope you sort something out.

seven-day-weekend wrote: »

You can only get Housing Benefit for a relative living in your property if you can PROVE that it was bought as a commercial venture (i.e with a Buy-to-Let mortgage or Permission to Rent on a residential mortgage), and it must be available to the open market (in other words would the property be rented to anyone else if his parents were not there).

I would imagine the above is going to be well nigh impossible to prove, by the very fact that it is a Right To Buy property.

Also, what you are proposing could be classed as a Contrived Tenancy (in other words he is only going to charge rent for the express purpose of claiming Housing Benefit) and as such it will not be eligible for HB.

I agree, especially with the 'Contrived Tenancy'.

I used to work in the HB/CTB department of a City Council, and
only in VERY exceptional circumstances were cases paid, and even then they had to be referred to Managers or even sometimes Heads of Department for approval, after fraud checks were carried out.

I doubt very much that your case would be approved, as you were not previously charging your current tenants rent. It may be worth checking the rules on transferring the mortgage to your OH's parents, as they were originally the ones eligible for the Right-to-buy scheme.

This situation is one of the reasons why serious concerns have (and probably still are) been brought up about the right-to-buy scheme; buyers often find that they cannot afford the property once they have bought it, but are usually limited to sell due to the terms and conditions of the scheme.

Haushinka

Also, what you are proposing could be classed as a Contrived Tenancy (in other words he is only going to charge rent for the express purpose of claiming Housing Benefit) and as such it will not be eligible for HB.

Hmm. Doesn't the recent change from Housing Benefit to Local Housing Allowance in the private sector affect this?

I could be mistaken but I think that housing benefit is only payable for a tenant if they are renting from the council or a housing association. If they are renting from anyone else - including a relative - then the rules for Local Housing Allowance apply instead.

Local Housing Allowance rates are set by the area rather than by the actual rent. However, a claimant still needs to show a tenancy agreement to be able to get it. But if the amount of rent that a claimant is paying doesn't affect the amount of allowance they can get, then I can't see that it would make any difference whether they're related to the landlord or not. I don't know - I'm only guessing.

seven-day-weekend wrote: »

You can only get Housing Benefit for a relative living in your property if you can PROVE that it was bought as a commercial venture (i.e with a Buy-to-Let mortgage or Permission to Rent on a residential mortgage),
Not true and mixed up too? If the relative lives in the property, you cannot get HB under any circumstances. If the relative does not live in the property the method of purchase is not relevant. In fact there are no rules at all that are aimed specifically at renting a property from a relative that does not live at the property.

and it must be available to the open market (in other words would the property be rented to anyone else if his parents were not there).
Not true either. There are no rules about renting from a relative if the do not also live there.

I would imagine the above is going to be well nigh impossible to prove, by the very fact that it is a Right To Buy property.

Also, what you are proposing could be classed as a Contrived Tenancy (in other words he is only going to charge rent for the express purpose of claiming Housing Benefit) and as such it will not be eligible for HB.
This bit is the right bit - this is potentially a contrived tenancy..... these rules can be applied to any tenancy at all. These are the rules that specify that a tenancy has to be on a commercial basis to be valid for HB.

Having said the above, the real sticking point in this case is that under Right-to-Buy, the parents must have made the purchase. If they then passed the property on, they cannot get HB within 5 years (iirc) unless they could also show that there was no way for them to stay in the property without passing it on.

To be honest the OP might (but might not) be able to find a route through this to get a valid HB claim, but there's no way anyone on here would really be able to assist them with it as it would be far too complex. At the end of the day though, there's no reason that the OP has to provide a home for their parents any more than anyone else does (from a legal perspective).