Can you claim housing benefit if renting from a relative?

Only_Girl

My Son who is on HB rents our property,

there is part on his HB form which asks if the property is owned by a family member which he ticks "yes",

the local council sets the rent of properties in the area whether private rental or council rental,

if the rent is more than the HB for private rentals then the tenant must make up the difference,

We receive around £140.00 less each month in rent than the cost of the mortgage but accept the difference because we asked him to leave his own home and move into our former home after the previous tenants trashed it then moved without telling us..OG

sirmyser

real1314 wrote: »

There's so much mis-information, and so many incorrect/biased conclusions in this thread it's almost impossible to know where to start.

1. Apart from the rules about the LL being a parent of a child in the tenants home, there are NO rules about relatives. None at all.

2. A Contrived tenancy is about one where it is set up to take advantage of HB/LHA, not one where a previously allowed subsidy is withdrawn (like the guy who can no longer afford to give a cheap rent).

3. The poster who thought they'd act as a fraud guy, when quoting a poster who said they'd fully explain, seems to mis-understand what fraud means.

I think a lot of the "relative" renter threads are getting responses based on some petty jealousy. There are few people who can "afford" to let a relative live rent free.
Some might live in a £150k house and have a prior £100k house and then let out the old house. Other people might have a £300k house and see their relative rent privately from another LL. Why is the former immoral if they both get HB/LHA?

This is a very interesting comment. There are quite a few core issues (in this thread) that need to be clarified. I will try!

HB is paid to those who genuinely need it, and the task of evaluating this becomes significantly more difficult for the HB dept when a relative is involved.

Yes people are sensitive where housing payments are made, there are a lot of people struggling to pay mortgages without any governement help, but this is not the purpose of this thread.

The very fact that this is a 'grey area' suggests that this is a subject well worth discussing. Also nice to see that comments are being posted from both potential claimants (who want to do the right thing in the right way) and Neill gb who works for a HB dept. all good contributions here.

I hope reggie1066 doesn't take the comments here too personally as there is more more information on this subject here, than I have seen anywhere else.

I have analysed a few cases, and the outcomes do vary which seems to support real1314 statement about their being no rules in this area.

I have personally approached a council and they literally 'got the book out' on this very subject. This again supports the above.

Councils have to be naturally aware of any claims made where there are family members involved, as the system IS indeed open for abuse. However, due to the recent economic climate/downturn, buy to let mortgages (possibly held by relatives) it is likely that some relatives now may require/need a 'return' (in order to survive) on a second investment property.

maybe HB dept's/government's need to address this issue as if a full LHA award is made to a relative (under commercial circumstances) then these funds may just serve to service the loan on the property in question. And what happens if the tennant's situation changes in the future, and in someway becomes the beneficiary of any equity?...

Maybe, a 'semi-commercial' solution would be more appropriate, where only the interest (or equivalent) on any loan secured on the property might be paid. After all, if there is no loan then the landlord/relative can afford the the favour - no? (I get the 'can of worms feeling at this point)

Maybe, a whole new thread should be started that relates to the rules/guidelines in the granting of government/taxpayer funds to people being supported in their housing requirements by a relative. (maybe MSE is not the place for that, but it seems that this is where this thread has lead).

Maybe neillhb should raise this with his superiors and/or start another discussion...

ok, I did say I would try to clarify... If a potential HB claimant + relative are genuine then approach the council FIRST (armed with the info here AND any concerns that you have). I have witnessed this situation first hand and they were advised to claim (even though the property had NEVER been commercially available). Yet still on the side of caution, an application for alternate housing was still submitted... and the jury at the council are still out. They may provide alternate housing OR they may grant HB for the current property currently occupied by the person (a single parent)

The key factors here are:

The onus lays with the council, and NO-ONE is at risk from any fraud allegations.

IF HB is not granted then an alternative housing solution is already in progress. Important where children are involved.

phew!

real1314

"...and Neill gb who works for a HB dept. all good contributions here."
Does he? I don't think he does, based on his apparent ignorance to what constitutes fraud.

"I have analysed a few cases, and the outcomes do vary which seems to support real1314 statement about their being no rules in this area."
I've read the Guide to HB and CTB, by Zebedee Ward and Lister. I've been reading it for about 12 years, updated annually of course. And I read the actual regulations now and then. There are no "renting from a relative" rules except for the parent of a child thing.

"then these funds may just serve to service the loan on the property in question."
As they would do on any BTL that i paid through HB/LHA. Why should a relative be barred from this situation? Not sure what the next idea (interest only) is meant to mean?

You can rent a craphole from a dodgy landlord with no problem, but if you rent a decent place from your uncle we all want it stopped? why?
We're "happy" to have the HB paid, the LL relative could rent to a 3rd party who gets HB/LHA and the Tenant relative could rent from the dodgy LL.

As for the rest of it, it's not a bad approach, tell them honestly what the scenario is, that way it's up to them to decide and you can't be done for fruad, but I don't think you really know enough to give advice. For one thing you seem unaware that councils do not set the rules for HB/LHA, as they are set by national government and come under the social security legislation. Councils simply administer the scheme on the behalf of the the DWP, so neil could talk to his boss, but it would do no good.

In many of the cases I've seen on here, if the facts were presented in a particular way, they would be paid, but if they were presented differently they would not. The problem is that the cases that should not be paid could be presented in a way that would lead to them being paid, and giving advice on here on what to say would encourage fraud. It's better for people to be advised to tell the council the situation and let them decide.

And just to illustrate how it can be done:

1. I get a means tested benefit and am allowed to earn £5 a week without it being affected. I work for my brother and he pays me £20, but it's only 1 week in every 4 that I work. So every time I work I lose £15 (after my £5 allowed).

2. I work every week now, but only for £5 a week. I lose nothing.

tbs624

real1314 wrote: »

There's so much mis-information, and so many incorrect/biased conclusions in this thread it's almost impossible to know where to start.

1. Apart from the rules about the LL being a parent of a child in the tenants home, there are NO rules about relatives. None at all.

:rolleyes: You are incorrect, so are yourself adding to the misinformation.

real1314

tbs624 wrote: »

:rolleyes: You are incorrect, so are yourself adding to the misinformation.

Ok, go find it. Post a link to the "relative" rule. Come back in 48 hrs to say you can't find it.

SouthCoast

2. I work every week now, but only for £5 a week. I lose nothing.

Illegal as it is below the minimum wage!

SABJ

SouthCoast wrote: »

Illegal as it is below the minimum wage!

i think the poster was using it as an example i dont think he/she earns a fiver a week !

tbs624

real1314 wrote: »

Ok, go find it. Post a link to the "relative" rule. Come back in 48 hrs to say you can't find it.

I read that as "that's an interesting point tbs, would you like to elaborate?";)

You said "there are no rules about relatives" and "There are no "renting from a relative" rules except for the parent of a child thing."

What there is comes under the heading of Circumstances in which a person is to be treated as not liable to make payments in respect of a dwelling. If they are treated as not liable for rent then there can be no valid claim for HB

Check out HB Reg 9(1)(b) and 9 (1)(e)(ii) for more "close relative" specifications and then if you like we can have a gander at some of the rest of the regs relating to partners and former partners too just to cover a few more circumstances

neverdespairgirl

real1314 wrote: »

1. Apart from the rules about the LL being a parent of a child in the tenants home, there are NO rules about relatives. None at all.

I think the applicable stat instrument is still The Housing Benefit (General) Regulations 2006 SI 213 If so, there are rules about relatives, such as:


9. — (1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where—

(a)the tenancy or other agreement pursuant to which he occupies the dwelling is not on a commercial basis;

(b)his liability under the agreement is to a person who also resides in the dwelling and who is a close relative of his or of his partner;




(c)his liability under the agreement is—
(i)to his former partner and is in respect of a dwelling which he and his former partner occupied before they ceased to be partners; or


(ii)to his partner's former partner and is in respect of a dwelling which his partner and his partner's former partner occupied before they ceased to be partners;





(d)he is responsible, or his partner is responsible, for a child of the person to whom he is liable under the agreement;



(e) subject to paragraph (3), his liability under the agreement is to a company or a trustee of a trust of which—

(i)he or his partner;

(ii)his or his partner's close relative who resides with him; or

(iii)his or his partner's former partner;


is, in the case of a company, a director or an employee, or, in the case of a trust, a trustee or a beneficiary;



(f)his liability under the agreement is to a trustee of a trust of which his or his partner's child is a beneficiary;



(g)subject to paragraph (3), before the liability was created, he was a non-dependant of someone who resided, and continues to reside, in the dwelling;



(l) in a case to which the preceding sub-paragraphs do not apply, the appropriate authority is satisfied that the liability was created to take advantage of the housing benefit scheme established under Part 7 of the Act.



Seems to have quite a lot to say about it, really.

neverdespairgirl

tbs624 wrote: »

You said "there are no rules about relatives" and "There are no "renting from a relative" rules except for the parent of a child thing."

You beat me to it!