Housing benefit question

lizzielondon

LHA- Local Housing Allowance= what used to be called housing benefit

AST- Assured Shorthold Tenancy= Standard tenancy agreement (automatic even if nothing written down, proof of its existance can be given by bank records showing rent payments)- The tenancy can only be an AST if the rent is less than £25,000 a year

LL- Landlord!

Steve_xx

lizzielondon wrote: »

LHA- Local Housing Allowance= what used to be called housing benefit

AST- Assured Shorthold Tenancy= Standard tenancy agreement (automatic even if nothing written down, proof of its existance can be given by bank records showing rent payments)- The tenancy can only be an AST if the rent is less than £25,000 a year

LL- Landlord!

Excellent, many thanks for your help.

lizzielondon

if the eldest daughter is currently meeting the mortgage payments would she qualify for LHA? or is the mortgage currently far less than the market rent?

also, if she is eligible to claim

I don't know if she would be able to claim the two bedroom rate for herself and her sister- i don't know if the sister would have to be a dependant?

they might have to each individual claim for the 'shared' rate which i believe is lower

Steve_xx

lizzielondon wrote: »

if the eldest daughter is currently meeting the mortgage payments would she qualify for LHA? or is the mortgage currently far less than the market rent?

also, if she is eligible to claim

I don't know if she would be able to claim the two bedroom rate for herself and her sister- i don't know if the sister would have to be a dependant?

they might have to each individual claim for the 'shared' rate which i believe is lower

I'm sure that the elder daughter would not be able to claim any HB as she is working full-time. I was just wonderiing about the possibility of the younger, unemployed sister being able to claim some portion. I don't know about the two-bedroomed rate you mentioned, I've not heard of that. But there are actually three bedrooms at the house!

lizzielondon

sure, but each person/child/couple are only eligible to receive help for what they need.

i.e. a couple would only need one bedroom so can only claim LHA at the one bedrrom rate. If they wanted to rent a two bed they'd have to make up the difference themselves.

So if this were to go ahead and it was allowed

the mother would have to give an AST to the two daughters, who would technically be jointly responsible for the rent, and the second daughter, if she is eligible for LHA, would receive the shared rate which in some areas i think is only approx £60 per week. This reflects that she is sharing a house and her need is for one of the bedrooms

lizzielondon

the mother should be wary of this scenario though

LLs have so many responsibilities they have to adhere to without breaking the law. On top of this if the mother and daughters fall out she could have a long and expensive battle to get her house back. The house will no longer be her home and she will have no right of access unless it was an emergency

it may be more hassle than its worth

Caz3121

to prove it is not a contrived tennancy she will also need to show that it is on a BTL mortgage or has permission to let from the mortgage provider.

guess the questions they may ask is
would the daughter be expected to pay the same rent if they were working
if the daughters were not there would the house be advertised elsewhere for a commercial rent
and as said - if the rent was not paid would she be evicted...and I guess to follow on...if she has not being paying rent up till now why has she not been evicted

Steve_xx

lizzielondon wrote: »

the mother should be wary of this scenario though

LLs have so many responsibilities they have to adhere to without breaking the law. On top of this if the mother and daughters fall out she could have a long and expensive battle to get her house back. The house will no longer be her home and she will have no right of access unless it was an emergency

it may be more hassle than its worth

Yes I understand the points you make. I think the problem is that the younger daughter is somewhat vulnerable. She is diabetic, and not awfully good at socialising for some reason; she's very timid. Therefore the mother, naturally, wants to shield her from too much trauma etc. Mother is now living with boyfriend in rented accomodation and has a less than average income in her own right. You can see what a struggle it can be to try and keep up mortgage payments on one property whilst paying a share of the rent with her boyfriend.

Ideally the mortgaged property would be sold and the two daughters would set up homes individually. But mother obviously feels that she has some obligation to provide for her daughters.

Aside from this I realise that if Mum did rent out the property to the daughters then she would be caught up in the respective tax liability too.

Steve_xx

Caz3121 wrote: »

to prove it is not a contrived tennancy she will also need to show that it is on a BTL mortgage or has permission to let from the mortgage provider.

guess the questions they may ask is
would the daughter be expected to pay the same rent if they were working
if the daughters were not there would the house be advertised elsewhere for a commercial rent
and as said - if the rent was not paid would she be evicted...and I guess to follow on...if she has not being paying rent up till now why has she not been evicted

Yes I understand your points. I can see that it would be most difficult to get this up and running. I think that for rental purposes it would have to be valued in line with similar properties locally.

The situation has only been on existence for a few months. So I guess that the financial stresses of it ar now starting to present.

Jowo_2

You should Google and check out the advice on 'contrived tenancy' as this will govern whether or not the local council will pay LHA to a live-out landlord who lets their property to a relative (i.e. set up to take advantage of the housing benefit system).

They will consider it contrived, and reject the application for LHA if, for example, the mother charges rent to the relatives when they are on benefits but doesn't when they are working for example. They could possibly see it as suspicious that a tenancy was set up quite some time after the move moved out, for example (note, this is just me speculating, not necessarily fact).

The mother needs consent from her lenders to let out the property, plus insurers, needs to provide a gas safety certificate on an annual basis if there is a boiler or gas appliances in place.

Landlordzone is a good source of information for regulations, landlords obligations and tenants rights, taxation and so forth. She also needs to understand how receiving an income through letting the property will impact means tested benefits in the future, should she ever need to claim.

If you check the LHA calculator for the area, you can see that those under the age of 25 are entitled to a rate equivalent to a room in a shared house - the size of the property where they live is irrelevant to the broad rental rate that is offered to her because of the area and her age.

Personally, though you see this as out of scope to your specific questions, I really can't see how the younger daughter is supposed to overcome shyness and unemployment by an arrangement whereby the mother gets her mortgage part-subsidised and paid off by the state...