Housing benefit when renting from family?

LizzieS_2

real1314 wrote: »

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.

Agree answers are needed.

It would only be mortgage fraud though if FIL failed to pay and there were sitting tenants there at repossession.

It looks to me as though the FIL has tried to do a favour without thinking of the potential long-term effects - even forgetting this current problem, he would have capital gains tax issues on sale as it is not his main residence.

silvercar

Some people get very agitated on this board!

First you need to be clear who is the landlord. If it is a limited company set up to rent property then it can't have any "relations"; a limited company can't be a father-in-law. If the director of a limited company wants to let a property out at lower than market rate, that is his perogative. If the property is owned by the company and rent is paid to the company then a tenancy has been established by the fact that the rent has been paid at regular intervals and accepted. Whether or not there always was a written tenancy agreement is irrelevent.

Talk of mortgage fraud is premature. Many commercial landlords have block mortgages secured on portfolios of property, rather than individual mortgages secured on individual properties. Even if there is a mortgage obtained and secured on just that property, some lenders will allow letting to family members. It all depends on the rental obtained, the property value and the mortgage amount, the financial security of the borrower, the lenders policy.....

real1314

Silver, I don't know if your agitated comment was meant to refer to me, but I'd just point out that:
1. I said it "may" be mortgage fraud, not that it is. Some people do have a portfolio mortgage and some do not exclude relatives, but many landlords do not have portfolio mortgages and most BTLs do not allow relatives.

2. The OPs initial story was that it was a mortgage arangement - FIL gets mortgage; SIL pays mortgage. Then it become an arrangement through a property company. Initially SIL paid the mortgage, that would suggest it's not a tenancy as you cannot have a tenancy where someone pays "the monthy mortgage payment, whatever it is".

3. They don't need to be clear who IS the landlord, they need to work out if anyone even IS a landlord.

From what I see so far, it's a private arrangement that does not meet the requirements of a tenancy for HB purposes. Unfortunately for the OP it's also unlikely to meet DWPs mortgage criteria either.

alm721

Pitlanepiglet wrote: »

Has your FIL been declaring the rental income?

Yes he has its part of his property business.

alm721

Ok, i can see Ive not made things very clear I'll try and answer the questions more fully.

As far as I am aware fil has a block mortgage with several properties on it. this is one of them

He has a property company which is not ltd, so as far as I am aware he would be classed as a sole trader? therefore he would own the properties secured on the mortgage.

The mortage is fixed rate and has not changed. Sil pays enough to cover this. With regards to property value etc, house is prob worth around £180k ish (really guessing here) she pays £765 per month not sure how this relates to rental amounts in terms of proprtion etc but it is average if not a bit more than what you could let a similar house for around here.

She has bank staments showing the amount she pays each month, this goes into fils property account.All money paid to fil has been declared as rent by fil

Thanks for all the advice given so far.
Regads

real1314

So, one more question.

Is the intention that SIL will eventually own the property? Or will she be paying for it ad infinitum?

alm721

I guess if fil dies then it may be part of her inheritance but as long as he is alive then she will pay rent, mortage is interest only anyway so still owed iyswim

real1314

Erm, it all sounds a bit confused. You started saying it was SIL paying the mortgage to FIL then it was through hig letting business and with a mortgage to that and her paying a fixed sum every month.
I'd suggest they apply for HB and state clearly and honestly what the whole set up is and what each party's intention was from the outset. Good luck to whoever gets to deal with it, the books will be out for this one!

scurry88

Hi just after some advice ive been trying to move out of the area i was put in at 17 when i had my little boy as the area is not nice at all housing association wont move me but my mum and dad own a pub/resteraunt with a two bed flat above i am in reciept of housing benefit on the house im in now would they grant me hb if rent was being charged by my mum and dad. thanx