Can I buy a house to rent to my lil sis on housing benefit?

scarletjim

Fair enough mod post, so back to the topic:

Would my proposal be refused by the council?
If so, why, who are we hurting?

cunningfox_2

No one here can answer the question. Your LA will decide based on the evidence provided.

The reason is they consider this a contrived tenancy - hurting no one but you are gaining from the benefit system. An instant tenant and secure rent whereas you would not have this if buying the house to rent on open market, you won't have agency fees for example.

Unfortunatley you need her to move in and apply before you will know for certain.

Oldernotwiser

scarletjim wrote: »

Excuse me - I refer you back to the question I asked before your post - how am I taking advantage of anything or anyone? I could get more rent from renting privately. It is nonsensical if the government doesn't let us do this surely, otherwise please explain to me what I stand to gain and what the taxpayers stands to lose compared to my sis renting from someone else? :mad::mad::mad:

Whilst I think that you are allowed to do this, your questions are illogical.

a. If you had genuinely wanted to be a BTL LL before, why didn't you?
b. If you could get more for the property than you're asking your sister to pay, is it a genuine commercial tenancy? (What normal LL accepts £100 pm less than s/he could get elsewhere?)
c. The taxpayer will, presumably be paying more LHA for a 4 bed property than it is currently doing for a 2 bed.

In addition, this family currently rent a much cheaper property than they might be able to afford when working - will it be any real help to them to find themselves in the benefit trap where they can't afford to take a job because they can't get as much income from employment as they can from benefits?

terryw

scarletjim wrote: »

Fair enough mod post, so back to the topic:

Would my proposal be refused by the council?
If so, why, who are we hurting?

The local authority will pay housing benefit if there is a genuine commercial tenancy in force.

1sue23

I rent a house out to my daughter and she gets a small amount of housing benefit , it is done on a buy too let mortgage and my daughter has a rent book , I charge my daughter the going rate and had to show proof of payment via bank statements mine and my daughters ,the housing benefit is paid direct to me ,my daughter is fully aware that if she misses a payment I would have no choice but too relet the house .
I also have the gas safty certicates and all other checks and my daughters deposit is protected I also have to pay tax on the rental income .

scarletjim

Oldernotwiser wrote: »

Whilst I think that you are allowed to do this, your questions are illogical.

a. If you had genuinely wanted to be a BTL LL before, why didn't you?
b. If you could get more for the property than you're asking your sister to pay, is it a genuine commercial tenancy? (What normal LL accepts £100 pm less than s/he could get elsewhere?)
c. The taxpayer will, presumably be paying more LHA for a 4 bed property than it is currently doing for a 2 bed.

In addition, this family currently rent a much cheaper property than they might be able to afford when working - will it be any real help to them to find themselves in the benefit trap where they can't afford to take a job because they can't get as much income from employment as they can from benefits?

a). I have been looking at BTL for 12 months or so, who knows which way property will go in the next year or so? If I don't get a place for my sis to rent the next 6 months then I might well buy somewhere else BTL.
b). I will get £100pcm less than the going rate, but I will have reliable tenants and will avoid agency fees, so it probably works out about the same.
c). The taxpayer will pay £900pcm if my sis moves into another 4-bed house not owned by me - so it is your point here that is illogical.
d). Your final paragraph - as explained earlier, unfortunately I doubt my sis or husband will ever work.

scarletjim

1sue23 wrote: »

I rent a house out to my daughter and she gets a small amount of housing benefit , it is done on a buy too let mortgage and my daughter has a rent book , I charge my daughter the going rate and had to show proof of payment via bank statements mine and my daughters ,the housing benefit is paid direct to me ,my daughter is fully aware that if she misses a payment I would have no choice but too relet the house .
I also have the gas safty certicates and all other checks and my daughters deposit is protected I also have to pay tax on the rental income .

The main difference between you and me might be this - did you own the house before she rented from you, or did you buy it deliberately to rent it to her? I suspect the former...

Oldernotwiser

scarletjim wrote: »

a). I have been looking at BTL for 12 months or so, who knows which way property will go in the next year or so? If I don't get a place for my sis to rent the next 6 months then I might well buy somewhere else BTL.
b). I will get £100pcm less than the going rate, but I will have reliable tenants and will avoid agency fees, so it probably works out about the same.
c). The taxpayer will pay £900pcm if my sis moves into another 4-bed house not owned by me - so it is your point here that is illogical.
d). Your final paragraph - as explained earlier, unfortunately I doubt my sis or husband will ever work.

If you think that your sister and her husband will never get jobs, why do you think that they'll be more reliable tenants than anyone else?

What will they do when their children leave home and LHA stops paying for a house of this size?

1sue23

scarletjim wrote: »

Excuse me - I refer you back to the question I asked before your post - how am I taking advantage of anything or anyone? I could get more rent from renting privately. It is nonsensical if the government doesn't let us do this surely, otherwise please explain to me what I stand to gain and what the taxpayers stands to lose compared to my sis renting from someone else? :mad::mad::mad:

I really strongly recent implications from both Anthillmob and TerryW that I am trying to do anything dodgy, I'm really not!!!

So back to the question I've asked from the start but no one has answered - why on earth would my proposal not be allowed, who is it hurting?

You have to ask the going rate for the area that the property is in if you want to ask for less in rent then that could be seen as a contrived tenancy .

welshmoneylover

scarletjim wrote: »

d). Your final paragraph - as explained earlier, unfortunately I doubt my sis or husband will ever work.

I find this disturbing. OK the husband is ill, but there is no reason why your sister can't work.

I think that HB payments should be severely cut so that it would stimulate more people to work especially if it made the difference between keeping a roof over their heads.

HB is a benefit trap and doesn't encourage people who can work to do so.