New claim for Universal Credit - Renting from parent?

GlassFull · 29 July 2014 at 3:57PM

Hello

I am in the process of opening a claim for Universal Credit whilst I look for a new job

At the same time my mums partner bought and moved into a new house, and my mum has moved in with him (the house is in his name)

My mum has a mortgage on a flat which we both lived in until recently, it was decided that instead of selling the flat she would let me stay here and pay her rent of £300 a month, which includes all bills, council tax and broadband and etc

On the Universal Credit application it asks about my 'housing circumstances' and one of the questions is 'Do you pay rent or eligible service charges to live in your home?' to which I obviously answered Yes. It then goes on to ask how much rent I pay

My main concern was my mum having to pay tax when she won't be gaining anything from me renting this flat from her. She can just about manage herself and could easily charge more. So my other question is, am I eligible to claim housing benefits? And will it make any difference in me telling the UC about my housing circumstances if they don't end up helping me anyway?

Unfortunately I can't post a link but I did open the same thread in the renting and selling forum

Housing_Benefit_Officer · 29 July 2014 at 4:25PM

You can claim Housing Benefit but you won't get £300 per month. We are not allowed to pay for utility bills so however much of your rent is for bills you will have to pay this yourself. As for Council Tax as you are the sole occupier you will become liable and will need to claim for help.

We would also look to see if the rent agreement is contrived or non commercial. If you didn't pay would your mother evict you and do you have a legally binding tenancy agreement. Do the mortgage company know the property is being rented out. Does your mother have landlord insurance and do the insurance company know she is renting it out.

As regard your mother having to pay tax on her rental income - that is a matter between your mother and the tax man. Most landlord would ensure the rent they charge covers all expenses with some profit on top. If she makes a loss due to the low rent questions could be asked that this was a non commercial arrangement.

Caz3121 · 29 July 2014 at 5:19PM

Has your mum advised her mortgage provider that she no longer lives in the property - they may grant her consent to let or get her to apply for a BTL mortgage, as well as tax on the rent she will also need to be a proper landlord; annual gas checks, landlord insurance etc

GlassFull · 29 July 2014 at 6:30PM

Thank you very much for the advice, I didn't realise just how much there is to take into account

She doesn't want to charge me more as she knows I wouldn't be able to afford it, but at the same time she couldn't charge any less either as it's needed to cover all the bills. It's something we will definitely need to discuss at length

Again thank you, I now know where to get started with all the information provided

nannytone_2 · 29 July 2014 at 6:45PM

as has been said ...
it would need to be a commercial tenancy.
her mortgage provider would have to be informed and permission granted.
she would have to pay tax on the rental income.
she would have to be prepared to evict you if you did not make the rent payments
how old are you?
the fact that your bills/council tax would have to be deduxted from the rental amount is quite4 a big issue. if it makes the rent ' unrealistically low' then it may raise a query as to whether it is a commercial tenancy or just a parent helping out their child.
if you are under 35, you would only be entitled to the shred accomodation rate of LKA ( housing benefit for private renters) and so you may not be entitled to anywhere near the amount your mother 'needs'

helping_hand2014 · 29 July 2014 at 10:01PM

£300 a month, which includes council tax? is she paying 2 lots of council tax? one on the flat and one on the new property?

[Deleted User] · 29 July 2014 at 11:01PM

she would be able to offset her mortgage against income tax,but other than that its a minefield

NYM · 29 July 2014 at 11:14PM

woodbine wrote: »

she would be able to offset her mortgage against income tax,but other than that its a minefield

Only the Interest on a mortgage taken out on the property is an allowable expense.

New claim for Universal Credit - Renting from parent?

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