Housing Benefit

SteveStone

Hi All,

Can anyone answer this question:

Can someone claim housing beneift on a property they are renting even if they are the owner of a property which is currenlty rented out. They have had to move out as their relationship broke down and they can't sell the property as it is £20k negative equity. They also can't afford the mortgage on their own.

Thanks.

real1314

Potenitlally, yes they can. There's nothing to directly exclude someone in the position you've described.

tboo

If you have an interest in a property other than your home and you let it out, the rent is treated as capital
However if you then receive income from this capital it will be added to your claim as income minus any expenses eg mortgage
I suggest you speak to the hb section and they can do you a calculation

Oldernotwiser

tboo wrote: »

If you have an interest in a property other than your home and you let it out, the rent is treated as capital
However if you then receive income from this capital it will be added to your claim as income minus any expenses eg mortgage
I suggest you speak to the hb section and they can do you a calculation

Are you sure about this? How can rental income be treated as capital?

tboo

Got the info from the CPAG book at work, the assessment team don't come across that many private tenants who also rent out a mortgaged property

daska

I'm surprised by this. two separate cases, both people I know, have been told that as they have a property and rent another, for whatever reason, they are considered to have two properties and therefore are not entitled to any benefit, even if the mortgaged property can't be sold, and even if the property is completely inadequate for the person to live in - i.e. studio flat for family with 3 kids.

hippy-chicy

daska wrote: »

I'm surprised by this. two separate cases, both people I know, have been told that as they have a property and rent another, for whatever reason, they are considered to have two properties and therefore are not entitled to any benefit, even if the mortgaged property can't be sold, and even if the property is completely inadequate for the person to live in - i.e. studio flat for family with 3 kids.

It is a complex issue and revolves around the capital value that is left in the property.
If the capital value is over £16k after allowing 10% selling costs and the property does not fall into a disregarded group then the capital will be taken into account. If this is over £16k they will not be entitled to HB/CTB.
It does not matter that the property is inadequate etc or that it ant be sold (however if the property is up for sale it could be disregarded for a limited period)

However, if, as in this case there is no capital value in the property there is no capital to take into account and they could be entitled depending on their circs.

The property would need to valued by the valuations service and a up to date mortgage statement provided to them. (It does have to be proved we wouldn't go on what the customer said alone.)

Nickynoo1

think the rental income is treated as "income", minus expenses i.e the mortgage.

hippy-chicy

tboo wrote: »

If you have an interest in a property other than your home and you let it out, the rent is treated as capital
However if you then receive income from this capital it will be added to your claim as income minus any expenses eg mortgage
I suggest you speak to the hb section and they can do you a calculation

I have never come accross a claim where there has been rental income from a property owned by the customer. I will also have a look at the guidence tommorrow as well as i would like to know for definate.

I think that the way things are at the moment with the current financial climate it may become more common place, as people who would not normally be claiming HB/CTB begin to do so.

Macro_3

Nickynoo and Hipy-chicy are both corrct in part. It would depend on whether the property is to be regarded as a capital asset or not.

If the second property is a disregarded capital asset (ie you have a vulnerable relative living in the property) the capital held in the house is disregarded but the income is taken into account less expenses such as mortgage, council tax and water rates etc.

If the property is a regarded asset, the capital held in the property is taken into account and the rental income is treated as accruing capital from when it is paid each month.

daska

It sounds like one of the guys ought to make another claim and push a bit harder! Thank you.