JSA (IB) refused - Rental income too much, yet no money to live on! Advice welcomed.

beccam

Conor wrote: »

Have you phoned up HMRC and registered as self employed? If you haven't, thats why the DWP have said you're not.

My uncle rents out flats and he lives in one of them. He's classed as self employed, pays Class 2+4 NIC and income tax on the profits.

Is it not different to let out flats than rent out rooms in your home?

LizzieS_2

Renting out rooms falls under the 'rent a room' scheme which is subject to income tax if you exceed the annual capital gains tax allowance. I don't think you can offset mortgage costs on this one, hence the downside is that Income support account for the income only.

Renting flats is more complicated as there are more ways of dealing with it from a taxation side.

beccam

Glad you could answer that one because I really didn't have a clue!!! Just presumed it had to be different owning 10 flats than renting out 3 bedrooms!!

dmg24

Conor wrote: »

I did, unlike you. He is a LANDLORD. That is his JOB. Stupid bint.

NOT ACCEPTABLE. Why is this kind of abuse allowed to continue?

KoalaElf

real1314 wrote: »

but you also say

"Originally Posted by KoalaElf
I am on a fixed rate."



This makes me think you're making this scenario up.

@ real1314

I am not making the scenario up. What is odd about having a 40% deposit with a 60% mortgage? The lenders are usually much happier to lend with a larger deposit...

I have had the property for just over 2 years [I bought during the summer of 2006 just before I went into my 2nd year at Uni]. I arranged a fixed rate mortgage at 4.29% for 2 years back then. Hence the fixed rate cam up for renewal at the end of Aug 2008.

I was only offered a BTL mortgage, don't ask me why - that's all the lenders would offer me. As for the income issue - yes I would not be able to prove I have sufficient income, which is why the mortgage has my father acting as a guarantor [he would rather have me invest my inheritance into a roof over my head than spend it on renting for the foreseeable future]

In answer to your questions:
The mortgage is for £150000.
I have a deposit of £100000.
The monthly interest is about £835ish.
I have three 'lodgers' who all together pay £1120 [all inclusive of bills]
I have no other income.
It is a BTL mortgage.
Technically I need to be paying £580 into a repayment vehicle in order to be in a position to repay my mortgage in 15 years [that is all they would give me since my father is 65], which up until recently I have been doing. Of course, currently I am not breaking even on my interest payments and bills, so I have to forget about the repayments for now and hope I see happier times ahead.

KoalaElf

EdInvestor wrote: »

You should not be on a BTL mortgage as you are not letting out a property, only rooms.

@ EdInvestor

I was only offered a BTL as detailed in my above post to real1214. I also explain my LTV as well in that post.

The first year I had the property, I used the rent-a-room allowance you mentioned, as well as my personal allowance. However last year it made more sense to offset my expenses. This is allowed according to HRMC as a live-in landlord, you just deduct only the % that applies to your tenants [ie in my case 75% since there are 4 of use living here altogether]

I believe the people living in my house class as tenants : they all signed Tenancy Agreements and "have exclusive possession of part of the property". I am not allowed to enter their rooms without 24hours notice just like with any normal tenancy and I cannot throw them out on a whim - I can only do that if they have broken a term of their contract.

KoalaElf

Conor wrote: »

I did, unlike you. He is a LANDLORD. That is his JOB. Stupid bint.

@ Conor
I am a she which *shows* you aren't reading. Calling people a "stupid bint" is totally unacceptable and not objective. As I have already said - it is *not* classed as my job by the DWP, otherwise I would be able to apply for JSA via the Self-employed route , they would determine I have no profit from my 'business' currently and so grant me eligibilty to JSA.

So what exactly is my job again? I do - in fact - agree I have a job. I put a lot of time and effort into managing this place - clearing blocked drains, calling out tradesmen, putting shelves back up that people have pulled down, cleaning, keeping my accounts in order... the list goes on.

But that is not what the DWP think, so unless you know something different I suggest you hold your tongue until you have something constructive to say.

KimYeovil

You are 24 and unemployed and want the benefits system to subsidise your purchase of a quarter of a million pound four (?) bedroom home where you and your father only have to contribute £50 per month?

There is no reason why this is a bad thing. But you have to accept you have to contribute something workwise to buy such an expensive home and cannnot expect the benefits system to provide for you. Even if you qualified, a young person is only entitled to the single room allowance and £45 per week - about 430 to 500 pounds. You already have an income more than double that.

You only need to find ten hours work a week. Are you really saying there are no rubbishy agency jobs that you can put up with one month in four to earn the money you need?

KoalaElf

Conor wrote: »

Have you phoned up HMRC and registered as self employed? If you haven't, thats why the DWP have said you're not.

Thankyou for this more constructive comment. I will see if registering as SE will help - however, when asked whether I should have done this to the DWP they seemed bemused, which makes me worry that they will not grant me eligibility anyway! Ie - they will still not allow me to offset expenses the way a normal business would. Which means I would have wasted more time and effort that I should have put into selling my house / trying to persuade my tenants to move out, and possibly incurred a fine from HMRC in the process

Having said that - I get the impression I am a complex case and most of them cant truly get their head around it [which annoys me because Im starting to think I know the decision makers handbook better than the people im trying to get an answer from!] I can't get a straight answer from anyone there... I start thinking, if only they would give me a job rather than these rather dim-witted folk! [or at least train them better]

KoalaElf

KimYeovil wrote: »

You are 24 and unemployed and want the benefits system to subsidise your purchase of a quarter of a million pound four (?) bedroom home where you and your father only have to contribute £50 per month?

They aren't subsidising it. I purchased it and do what I can to ensure it continues to pay for itself. If I had this house on my own and didn't earn anything from my tenants - I would be eligible for the £47 p/w PLUS help with housing costs [ i.e mortgage interest] My situation means I am not even asking for that - only that I get help with my living costs which clearly aren't being met because I am unable to find work.

If i *could* sell my house [which looks to be near to impossible - three houses on the street have been on the market for 6 months] not to mention I have sitting tenants, then I would be straight onto the DWP to claim JSA *and* housing benefit wouldn't I?! [Assuming I had not found that long-awaited job before then and cursed myself for losing a load of my deposit and now having to pay rent to pay the interest on someone elses mortgage]

I am *trying* to keep myself *not* so dependant on the state, and all I am met with is shrugs and accusing glares. I have found myself in this situation through as I see it no fault of my own - we all take a risk upon getting a mortgage or any other loan - any of you who have 'affordable' mortgages could find yourself redundant tomorrow and equally as desperate as me.

I am trying everything I can to find a job Kim, but with every rejection I get I get more and more desperate not to get into unaffordable dept and eventually have to declare myself bankrupt [yes my boyfriend has been there done that already at the age of 25 so it isn't uncommon for graduates nowadays] I feel like I am in an impossible situation... it may sound dramatic, but I really can see how normal people end turning to prostitution etc to try and stay solvent.

I don't see why I should be penalised for getting people renting rooms in my home to try and keep myself afloat?! If I had guessed two years ago this would be my situation then yes I would have bought a 1bed flat for myself [however at the time that was less affordable] That way I would be able to claim JSA simply, along with Housing Costs without all the chaos that renting rooms to strangers brings.

Please don't assume I was born with a "silver spoon" and I am scrounging, my life story is far from easy and like many, I am doing my best to make a good go of it.