Need some advise re housing benefit

metalgal

This is a long story but ill try to be a brief as i can. My aunt is 69. She and my father co-owned her flat. Unfortunately my dad got into a lot of bother, business went downhill and he was in need of money to keep his business afloat but was up to his eyes in debt. He was selling both of his houses which he would have had about £500,000 equity, but he needed the money asap so my aunt had agreed that they would sell the flat to my two sisters and that they would get a mortgage against it for £80,000 which they would pay off when my father sold the house. They kept some money from 80,000 to cover mortgage payments etc while my dad tried to sell the houses. Unfortunately my dad was unable to sell the houses, due to crap market, (he wouldn't have been in the situation he was in if the market was good he was a solicitor and done a lot of conveyancing work) eventually things went from bad to worse and he has since had all his assets seized.

Basically my sisters are running out of money to pay the mortgage for the flat now. They cannot afford to pay it themselves, they each have their own mortgages and stuff, and we had done a bit of research into applying for housing benefit for my aunt, so that she would be renting the flat from my sisters. Otherwise they will have to sell it. She is in receipt of pension credit so would automatically qualify but there is the issue that she sold the house. My aunt received absolutely nothing from the sale of the house it all went to my dad. He needed to sell the house and luckily my sisters were willing to get the mortgage, otherwise my aunt would have had to move out and why should she be punished for my dads mistakes.

Well anyway we applied for housing benefit and it was turned down. We expected this and it is now going to appeal and we are trying to prove that if my aunt hadn't sold the house she would have been made homeless. Can anyone give me any help as to how we could prove that the house had to be sold, or if anyone knows of any legislation or anything to help our case. We have all the info in relation to my dads debt and court orders etc and can prove that at no point did my aunt receive any money.

Any help or advise would be most appreciated. Please don't leave nasty comments, I am fully aware that my dad is a selfish idiot. I just want to help my aunt stay in her home and to stop my sisters having heart attacks due to stress before they are 35.

Fire_Fox

The problem is your sisters need to prove this is a commercial tenancy AND not a contrived tenancy. Commercial means they bought the place to rent out (they didn't), they will charge market rent and would evict your aunt if she didn't pay her rent (I suspect they would not). Contrived means the situation is deliberately set up to get the council to pay the mortgage (I appreciate this is not true). Lastly there is the issue of your aunt giving her share of the equity to your dad, this may be deemed deprivation of capital and your aunt can be treated for benefits purposes as if she has the half share of the proceeds from selling the flat.

On top of that I would question whether your sisters understand anything about being landlords. Firstly they need consent to lease from the lender or a BTL mortgage, do they have this? It is unusual for lenders to allow properties to be rented to family, so the plan may well be breach the terms and conditions of the mortgage.

I would strongly recommend you sell the flat rather than appeal, there really is too much again you. I am really sorry that I am not able to be more positive, but I assume that every month you peruse this option is costing your sisters.

dmg24

Fire_Fox wrote: »

The problem is your sisters need to prove this is a commercial tenancy AND not a contrived tenancy.

This is not the issue here, the issue is that the aunt used to own the property that she is now trying to claim LHA for.

OP, was the aunt/ your father in arrears on their mortgage (if they even had a mortgage)?

Macro_3

Has the claim definitely been turned down because the aunt previously co-owned it?

I understand that your aunt co-owned the flat and it was sold to the sisters because the money was needed elsewhere - however, why would the vendors then repay the buyers mortgage of 80k when other assets were sold? Would ownership have transferred back to the aunt/dad if the 80k was repaid?

Was the flat only worth 80k? Has your aunt paid rent throughout the period that the flat has been mortgaged? Were any of the business debts for which the money was needed hers? Were there mortgage arrears or a repossession order on the flat at the time of sale?

Jowo_2

Perhaps this is something you can run past Shelter who give free expert advice to tenants or CAB to help with the appeal. There's plenty of information on Landlordzone and this website, plus the internet in general, on the topic of a 'contrived tenancy' and 'deprivation of capital' to understand better why your aunt's giving away of her share of the property and the non-commercial approach to the tenancy is affecting access to means tested benefits.

I don't see this as an area where your aunt is being punished by the system for your father's mistakes (though it probably feels like it) but where some complex decisions were made without the full consequences being considered. Sounds like it was all premised on an optimistic outcome with few of the risks being considered and now sadly all of the previously unidentified risks have been realised.

Unfortunately, if the bad luck continues and the property is repossessed, the local authority could be similarly unsympathetic to offering support and assistance to your Aunt as they tend to reject homelessness applications made by those whose actions are seen to contribute to their situation - the 'intentional homelessness' rule. However, her situation is very complex and perhaps Shelter can advise what could happen in a worse case scenario and offer some solutions to prevent or resolve it.