Rent a room scheme query

Steve_xx

The scenario is:

Grandma age 73, daughter and granddaughter live together in a council house. Grandma has her state pension and no capital and daughter works in a low paid job. Granddaughter not working at the minute. Daughter gets help with rent and council tax as she's a low income earner. They currently pay about half of the rent due and about one third of the council tax.

Daughter and granddaughter are considering buying a house between them and having grandma live with them. Can they charge grandma under the "room for rent Scheme" to live there? Obviously if they could do this then this would help with the mortgage payments? But is it legitimate to charge ones mother for living in the same house as the daughter and granddaughter? If it is possible to charge grandma, then how do you arrive at the correct price to charge? I know that there is a maximum per annum of approximately £4200 allowed on the room to rent scheme.

Lord_Dante

As far as I'm aware and don't quote me on this, you can't charge rent to anyone that you are related for. You can't claim HB to pay rent to a family member. Someone can confirm this. Sorry I'm not 100% sure. You could just phone your local HB department and ask them.

robpw2

i dont know the answers so hope someone gives you some advice

but usually with government schemes you get nothing if its your own family etc

Steve_xx

Lord_Dante wrote: »

As far as I'm aware and don't quote me on this, you can't charge rent to anyone that you are related for. You can't claim HB to pay rent to a family member. Someone can confirm this. Sorry I'm not 100% sure. You could just phone your local HB department and ask them.

Yes I kinda thought that. But I remember years back that a guy I worked with inherited half of his Mums house after she'd died, along with his sister who inherited the other half. He bought the other half from his sister and got a mortgage to do so. Then he put his daughter in there who had just given birth. The DHSS, as it was then, paid something towards the mortgage, ie the equivalent rent or whatever. I remember asking him about the legitimacy of it all and he said had gone into it with the DHSS and it was ok. He wasn't the type to do anything that was illegal. It was a lot of years ago but I just wondered if it was possible to do this under the rent a room scheme.

thatsnotmyname_2

In short, no!
It wouldnt be legitimate because daughter wouldnt actually be taking any money off granny (im presuming!) and granny cant claim HB to fund it.
You can call the self assessment helpline on 0845 9000 444 (8am - 8pm 7 days) and ask to speak to a technical adviser for general advice. Dont worry, you wont have to give any personal details if you say you just want general advice re rent a room.
Probs best if you call mid-day on a weekend or after 6 mid week.

Re your post above about your mate doing it, anyone can become a landlord and the tax man will just be interested in the monies being received!
Please do phone that number, they'll answer it quickly for you!

Steve_xx

Many thanks for the response. Yes, in this instance daughter would be taking money off of grandma in order to help fund the mortgage. So the hope would be that grandma could claim it as HB.

seven-day-weekend

No,It would not be possible to claim HB for Gran if you live in the same house.

If you live in a different house to Gran, then she may be able to claim HB if it can be proven that it is a proper commercial venture and not just a 'contrived' tenancy to get HB. In other words a BTL mortgage or Permission to Let on an ordinary mortgage, has the place been rented before, would it be rented if Gran didn't live there.

My son was able to claim HB on an investment property owned by me because I was able to prove this with a Permission to Let and an Estate Agent's letter.

But to claim whilst living in the same house is not possible.

Oldernotwiser

How are they going to be able to buy a 3 bed house on one low income and no capital? Sounds fishy to me!

Steve_xx

Oldernotwiser wrote: »

How are they going to be able to buy a 3 bed house on one low income and no capital? Sounds fishy to me!

I did not state that there would be a specific number of bedrooms. I asked a question regarding the rent a room scheme. I did not refer to how the initial capital might be raised and that does not form part of the consideration here. How you could derive that there is something "fishy" about it is beyond me.

Let me assure you that they are not the type of people to enter into something "fishy", illegal or fraudulent. This is why I am enquiring as to the legal possibilities within the help framework that may be available given their particular circumstances.

DaisyFlower

Oldernotwiser wrote: »

How are they going to be able to buy a 3 bed house on one low income and no capital? Sounds fishy to me!

I wondered that too. 3 adults means 3 bedrooms as cant see them sharing.

Rent on council housing is very cheap so if she's getting a large part paid by benefits its hard to see how buying a house is possible.

Steve_xx

DaisyFlower wrote: »

I wondered that too. 3 adults means 3 bedrooms as cant see them sharing.

Rent on council housing is very cheap so if she's getting a large part paid by benefits its hard to see how buying a house is possible.

With respect, that's not what I asked about. The amount of rooms that there might be is not especially relevant.

I am trying to ascertain the legitimacy of renting a room to ones' mother and potentially recharging that as Housing Benefit in order to help pay toward a mortgage.