Housing benefit question

Steve_xx

Jowo wrote: »

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...

Thanks for all the points you mention.

Yes I know it seems like the mother potentially could be getting her mortgage helped by the state. Whether that is right or wrong is debatable on an individual basis I guess. If the younger daughter has to end up in a new flat, then as she is not employed, the state will pick up the tab for that. The mother wouldn't benefit from that arrangement, but somebody would!

I have two friends who cohabit, one an optometrist and the other a university lecturer and they have two young children. You'll agree that they will be on a fair pair of salaries and yet they are able to obtain working tax credit for their children. I think it's obscene that they get this benefit, yet there's little I can do about that.

Jowo_2

Steve_xx wrote: »

Thanks for all the points you mention.

Yes I know it seems like the mother potentially could be getting her mortgage helped by the state. Whether that is right or wrong is debatable on an individual basis I guess. If the younger daughter has to end up in a new flat, then as she is not employed, the state will pick up the tab for that. The mother wouldn't benefit from that arrangement, but somebody would!

I have two friends who cohabit, one an optometrist and the other a university lecturer and they have two young children. You'll agree that they will be on a fair pair of salaries and yet they are able to obtain working tax credit for their children. I think it's obscene that they get this benefit, yet there's little I can do about that.

Your points are also valid - the young daughter is fully entitled to move out to lodgings and get her rent/CT paid there and this could be dearer to tax payers. There are probably tens of thousands of landlords whose mortgages get legitimately paid off from charging their relatives a commercial rent.

I am not a fan of tax credits and think they should be scrapped, not just because of the upper salary ranges you mentioned but because it disincentivises many households from moving from part-time into full time work, and/or discourages the second adult from taking up employment.

Essentially, we've ended up with a benefit system where a household with nobody in employment or low hours of working enjoys the equivalent of a graduate/management income. For example, a single mother with 2 kids in may get around £900 per month in benefits, then a similar sum in LHA/CT, which means she would have to earn around £3ok per annum to afford this lifestyle off her own back, entirely unfeasible in most cases (that's based on a bank statement my landlord friend found from a former tenant). Or where one of the adults is in low paid employment and the household earns the same sum again in benefits (that's based on my friend's experience).

What our experiences show is that the affluent are receiving benefits and those who have little earning capacity are also enjoying a standard of living they couldn't hope to earn independently through employment.

I still hope, however, that the household you are researching their LHA entitlement are putting equal energy into ensuring the younger daughter gets into employment, education or training to boost her confidence rather than just rattle around in her mother's property losing her self-esteem through not having somewhere to commit her time and energy to.

Steve_xx

Yes I have to agree with you. I don't understand properly the functionality of this working tax credit scheme, but the bits I do understand about it leave me bewildered that people on what I would term as super incomes are able to get these tax credits in addition to family allowance.

I agree with you that the tax credit system is unwieldly and it ought to be scrapped. I can't fathom HB entitlement out, nor Council Tax, but years ago I remember that I could fathom it and there was a relatively simple formula that enabled one to do so.

A friend of mine, a single man with no children, who worked for 30 years and was made redundant. He was able to claim Jobseekers Allowance at about £55 per week for 6 months and nothing else during that period; he owns his own home, no mortgage or debt. After 6 months he got nowt. This is because he has a few bob in the bank. In one sense he's lucky to have enough cash banked to live off of. He's not hugely well off and of course he pays tax on the modest interest his banked cash pays.

Isn't it bizarre that he's supporting himself and then paying tax in order to fund the likes of the optometrist and the university lecturer I mentioned in my earlier post?

With the current state of government finance in the UK I think that Family Allowance should be means tested and I dont think that any couple earning joint salaries of the ilk of 60k should be getting any state handouts at all. The bill to the taxpayer for this lot must be huge and it needs reform, urgently.

property.advert

There is a very simple formula for HB / LHA which is to use the post code checker https://lha-direct.voa.gov.uk/Secure/Default.aspx

Steve_xx

property.advert wrote: »

There is a very simple formula for HB / LHA which is to use the post code checker https://lha-direct.voa.gov.uk/Secure/Default.aspx

That's excellent, thanks for that.