Housing benefit when renting from family?

alm721

Hi there, bit of a long one, apologies. A few years ago when my sil wanted to move her and her hubby couldnt get a mortgage so my fil bought the house on a mortgage with them to pay it so for the last few years he has paid the mortgage and they have then paid the mortage amount to him. They pay exactly what the mortgage is so he is getting nothing out of it. My bil has just been made redudant and they have applied for coucil tax/ housing benfit. They have filled in the form but have had a letter back asking questions such as would my fil rent to anyone or just a family member, what action he would take if they fell into arrears and whether he bought the property to let to his daughter. Therefore Im assuming that the asnwers to these questions will have some impact on wether they can claim any help with the rent or not? Does anyone know how/if these questions will affect their claim?
Thanks

cw18

they will not pay housing benefit to pay rent where the landlord/lady is a close family member unless the property was offered on the open (rental) market.

as it sounds like it wasn't let through an agent, I think they'll have a job trying to convince housing benefits that it wasn't bought just to be let to your SIL.

dmg24

cw18 wrote: »

they will not pay housing benefit to pay rent where the landlord/lady is a close family member unless the property was offered on the open (rental) market.

as it sounds like it wasn't let through an agent, I think they'll have a job trying to convince housing benefits that it wasn't bought just to be let to your SIL.

Sorry, that isn't true. The LA are ensuring that there is not a contrived tenancy, and whilst offering the property on the open market would be a contributory factor in deciding this, it is only one of many factors taken into account (the main ones being covered in the letter sent by the LA).

alm721

Thanks for the replys, can I ask what a contrived tenancy means? Also this wasn't let through an agent. With regards to the questions asked, he did buy it with the intention of my sil renting it however he would have no heistation in evicting them if they couldn't pay (sounds mercinary but he cannot affods to pay it, he would either have to sell it or re-let it). Will this make any difference?
Thanks again

cw18

Apologies if what I said wasn't totally correct -- but it's what I was told when we were trying to find a way of SIL keeping a roof over her head (when it looked like she might have to move out of her current place). And my Dad was told the same thing when he considered buying a property for my DD to let a couple of years later. But that was over 5 years ago, and I guess they could just have been trying to put us off the idea.

I think the eviction is likely to be a key thing. If he evicts them, then housing benefit will have to pay them rent for alternative accomodation.

Conor_3

alm721 wrote: »

Thanks for the replys, can I ask what a contrived tenancy means?

When the reason for the tenancy is effectively to get the council to pay for the mortgage by "inventing" a rent agreement, pretty much in the way that your relatives are planning to do.

It's your FILs house. Your SIL and OH have been living there without a tenancy agreement in place, so they're not tenants. Now that the hubby is unemployed, all of a sudden they're going to magic up a rental agreement to get the council to pay HB to cover the mortgage. That's a contrived tenancy.

Basically unless he lies, your FIL DID buy the property solely to let to his daughter under an unofficial arrangement and wouldn't chuck them out and pursue them for back rent if they couldn't pay. It is not a proper tenancy or anything approaching one.

alm721

It was actually my fil property business that bought the property and lets it to my sil. He has many other properties that he lets so is a commercial landlord and bought this as a buy to let investment and would have let it someone else if my sil hand't wanted to move in. They have always paid enough money to cover the mortgage he just hasnt made any money out of it as he has'nt charged more than the cost of the mortgage. He has also catagorically stated that he would throw them out if they cant pay the rent and I have no doubt that he would do this, with things as they are he is not in a poistion to be able to pay the mortgage without a rent for the property.
Also if they are not 'tennants' then what are they? It is not their house and they are paying a 'rent' that covers the mortgage and have been for the last few years. Its not like they havent been paying anything and are now trying to get housing benefit. None of this would have been an issue if bil had not lost his job but there you are.

okra

The LA will be looking at both contrivance and commerciality. The fact that he is charging them only enough to cover the mortgage and not making a profit suggests that the tenancy is non-commercial, as I assume he doesn't do the same for his other tenants. The fact he bought the property for them to move in to, and the lack of an official tenancy agreement also support this. If the arrangement is non-commercial, they won't entitled to benefit.

However, the onus is on the LA to prove contrivance/non-commerciality, which is not easy to do.

Pitlanepiglet

Has your FIL been declaring the rental income?

real1314

alm721 wrote: »

It was actually my fil property business that bought the property and lets it to my sil. He has many other properties that he lets so is a commercial landlord and bought this as a buy to let investment and would have let it someone else if my sil hand't wanted to move in. They have always paid enough money to cover the mortgage he just hasnt made any money out of it as he has'nt charged more than the cost of the mortgage. He has also catagorically stated that he would throw them out if they cant pay the rent and I have no doubt that he would do this, with things as they are he is not in a poistion to be able to pay the mortgage without a rent for the property.
Also if they are not 'tennants' then what are they? It is not their house and they are paying a 'rent' that covers the mortgage and have been for the last few years. Its not like they havent been paying anything and are now trying to get housing benefit. None of this would have been an issue if bil had not lost his job but there you are.

Ok, I'm confused. You said you FIL bought it and they pay the amount of the mortgage to him - does that mean that when the mortgage has gone up or down they have changed the amount they paid?

Then you say it was FILs business that bought it - you can't rent on a BTL to a family member so it may be mortgage fraud? And who does the payment go to? To the business bank account or to the FILs bank account? And is the mortgage a BTL even?

Answers needed before advice can be given imho.

1sue23

My daughter rents a property from myself ,property was purchased as a commercial let and my daughter has paid rent on the basis of this ,she has a rent book and we have all the safety checks etc yearly and property is also insured as commercial ,the rent was set on the average of properties in the area ,it makes no difference if the mortgage increases or decreases the amount is set by the council ,we had to prove the tenancy was not contrived and yes I would evict my daughter and granddaughter if the rent was not paid as I would be unable to fund the mortgage ,she only receives a small sum in housing benefit which is paid to me direct the rest is paid to me via my daughter.
I think the council would want proof via bank details and a rent book that the rent had been paid if proof cannot be shown then I think it would be difficult to prove that it is not a contrived tenancy.