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Can you claim housing benefit if renting from a relative?

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Can you claim housing benefit if renting from a relative?

edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
41 replies 43.8K views
Lula_01Lula_01 Forumite
1 posts
edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
Hi,

I am 8 months pregnant and was recently served an eviction notice for my flat. I was faced with being homeless and my mum came to the rescue and said that i could rent her house whilst she moves in with her partner. However i need to be able to pay her rent as she is still paying the mortgage and as i am on statatory maternity pay i can't afford it. Can i claim HB if i am renting from a relative?
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Replies

  • My friend rents her dads house from him, he lives abroad and she is on income suport and they pay her rent.
  • Bogof_BabeBogof_Babe Forumite
    10.8K posts
    ✭✭✭✭✭
    How are you currently paying the rent on your flat? Or is that why you are being evicted?

    If you are new to housing benefit you will be put on Local Housing Allowance now, which is calculated on what accommodation you need in your own circumstances, and takes no account of what the rent for a particular property actually is. I should imagine with a baby on the way you will be entitled to two bedrooms, so if your mum's house has more than that you might not get the going rate for similar houses in the area.
    :D I haven't bogged off yet, and I ain't no babe :D

  • Unless the rules have changed under the new Local Housing Allowance, then you aren't allowed to claim HB if you are renting from a relative.

    Doesn't stop people from doing it though!
  • Unless the rules have changed under the new Local Housing Allowance, then you aren't allowed to claim HB if you are renting from a relative.

    Doesn't stop people from doing it though!

    I originally believed the same thing, until I was told by a friend that she knew someone that was doing it. After investigation, the bottom line is that the local council (they do vary) can award housing benefit to a relative if the following conditions are met:
    • The letting is on a commercial basis
    • An appropriate tenancy agreement (assured shorthold) is held
    • That the tenant has no financial interest in the property
    Also, because the landlord is a relative the HB department are more likely (naturally) to carry out more extensive checks, such as:
    • Landlord's current address verification
    • commercial insurance check
    • Enquiries about the status (if any) of any loan secured on the property in question, (commercial, residential etc) AND if the lender is aware of any intent to rent out the property.
    • Property's previous owner checks (as declared on tenants HB)application)
    Other considerations:
    • Tax must be paid. Rental income must be declared by the Landlord in annual tax returns.
    • Fire regulations must be met
    • New L.H.A. (local housing allowance) that was introduced on 7th April this year. This covers the applicant for the number of bedrooms required NOT the number that you have. L.H.A rates are available from your local council website.
    The best advice, would be to just approach the local council, and put all the cards on the table... that way you won't get into any trouble and the worst that can happen is they can say no..

    I hope this helps.
  • tbs624tbs624 Forumite
    10.8K posts
    Lula_01 wrote: »
    ...I am 8 months pregnant and was recently served an eviction notice for my flat. I was faced with being homeless and my mum came to the rescue and said that i could rent her house whilst she moves in with her partner.
    ... "interesting" definition of mum coming to the rescue .....

    What was the reason for the eviction? Were there any rent arrears or other tenancy breaches on your part, that would count as you intentionally making yourself homeless?

    There have been a spate of posts about renting from/to relatives on here recently: some are probably looking to "milk" the system but you may be able to get LHA provided that the arrangement is not deemed to be a "contrived tenancy".

    Your mother will have to get permission from her mortgage lender first though, and some lenders may say no LHA tenants are permitted, they may charge her a sizeable admin fee or they may inist that she switches to a different type of mortgage.

    She will also have to sort out Energy Perf Certs, gas safety certs, fire safety compliant furnishings if letting it furnished, LL insurances and be responsible for all repairs and maintenance issues, plus keeping proper accounts for tax purposes and all the other legal obligations that have to be covered by a LL.

    The amount that you get from LHA is unlikely to cover the entire cost of your mother's mortgage

    Talk to someone at Shelter for advice. 0808 800 4444
  • A close relative bought a house for my child and I to live in when we moved out of London nearly five years ago. He lives elsewhere. The plan was that I would contribute what I could towards the mortgage, and that would be deemed 'rent', so I paid what I could which wasn't a great deal.

    Now my relative's business has gone downhill in the recession, and he can no longer afford to pay the mortgages on both my home and his own without me paying a proper rent. Otherwise he's going to have to rent it to somebody else - he bitterly regrets this but has no choice. I've therefore applied for HB, but I'm told that because up to now I've had no formal tenancy agreement, and no proof of rent paid, any formal arrangement I enter into with my relative now in order to obtain HB will be viewed as a 'Contrived Tenancy'.

    I really don't want to lose my home. It's the first "home of our own" that my child and I have ever had. It was bought for us by my relative exactly for that reason. Now we're told we'll have to move elsewhere because I can't afford the very reasonable rent my relative plans to charge, and instead I'll be claiming HB to pay an inflated rent belonging to a commercial landlord to live in a home that's not 'our own'. I've decorated my house, I've put up shelves, made repairs, built a whole garden wall, and I've landscaped the garden with my own bare hands... I always thought we'd be here for years to come. It never occurred to me that all for the lack of a formal agreement I wouldn't be able to fall back on HB if the crunch came. It's not as if I don't work. I do, but even if I worked extra hours in order to earn more, my additional income would simply be deducted from my Tax Credits, so I still wouldn't be able to afford to pay any more rent without claiming HB.

    Can somebody please advise me how I should proceed. I so wish I hadn't told the HB authorities that I haven't had a formal rental agreement in place before now. It seems to make all the difference and now I'm going to lose my home.
    Thank you.
  • 1sue231sue23 Forumite
    1.8K posts
    Unless the rules have changed under the new Local Housing Allowance, then you aren't allowed to claim HB if you are renting from a relative.

    Doesn't stop people from doing it though!

    My daughter rents from me and claims housing benefit ,we had to prove it was not a contrived tenancy .
  • poppysarahpoppysarah Forumite
    11.5K posts
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    reggie1066 wrote: »
    A close relative .......


    Now my relative's business has gone downhill in the recession, and he can no longer afford to pay the mortgages on both my home and his own without me paying a proper rent. Otherwise he's going to have to rent it to somebody else - he bitterly regrets this but has no choice. I've therefore applied for HB, but I'm told that because up to now I've had no formal tenancy agreement, and no proof of rent paid, any formal arrangement I enter into with my relative now in order to obtain HB will be viewed as a 'Contrived Tenancy'. .

    Which bit of contrived tenancy confuses you?

    Asking for a higher level of rent as HB when you've previously had a "family" rate is abuse of the system. Find somewhere else to live to avoid any risk of being accused of fraud.

    Also if his business is going down the pan how long before he'd have to sell anyway?

    How close a relative? Father of the child?
  • oilitoilit Forumite
    234 posts
    poppysarah wrote: »
    Which bit of contrived tenancy confuses you?

    Asking for a higher level of rent as HB when you've previously had a "family" rate is abuse of the system. Find somewhere else to live to avoid any risk of being accused of fraud.

    Also if his business is going down the pan how long before he'd have to sell anyway?

    How close a relative? Father of the child?

    i dont understand all (aka any) of the rules associated with HB, but surely if you were paying a 'mates rate' rent, which was effectively subsidised by a relative, but that relative is now unable (with proof of why) to subsidise, then presumably hb should assess what you really need and pay up to the amount based upon rooms you need - which would be deemed an assessed fair rent for the minimum you need. if you chose for a bigger place then you would need to cough up the extra.

    The alternative is surely to move out, find soemwhere to stay for a fixed week or two, then go back and ask for hb and find the amazing house that is decorated just as you want;-) I woudl explain this to the HB guys and ask them for help - not barriers !
  • NeillgbNeillgb Forumite
    574 posts
    oilit wrote: »
    i dont understand all (aka any) of the rules associated with HB, but surely if you were paying a 'mates rate' rent, which was effectively subsidised by a relative, but that relative is now unable (with proof of why) to subsidise, then presumably hb should assess what you really need and pay up to the amount based upon rooms you need - which would be deemed an assessed fair rent for the minimum you need. if you chose for a bigger place then you would need to cough up the extra.


    The alternative is surely to move out, find soemwhere to stay for a fixed week or two, then go back and ask for hb and find the amazing house that is decorated just as you want;-) I woudl explain this to the HB guys and ask them for help - not barriers !

    Pray that I am not the HB guy you ask for 'help' from as what you may well end up with a conviction for benefit fraud and a nice little article in the local rag highlighting the fact!!

    Sorry you have your problems but it ain't the taxpayers fault.
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