renting room to friend on housing benefit?

honeychurch

Not sure if i have posted in the right place here. I need to rent a room out in my house and a friend of my sisters who is eligible for housing benefit is interested. Can any one give me any idea of what would be involved? How regularly does the money get paid, who does it go to, are they ever "behind" in paying it to you?

I have been trying to do some research and read somewhere that housing benefit doesn't cover household bills - but i was originally planning on making rent inclusive of bills, but exclusive of council tax, so what would be the best way of doing this?

cattie

Just wondering if you are renting out just one room then would & should council tax be applicable to a lodger anyway? Council tax is usually paid by the tenant of a rented property or the occupier of an owned property.

A logder wouldn't get a council tax bill so would have no liability.

lil_me

Housing benefit can be paid for room rental as long as the person is not a relative etc.

It will not cover bills etc so that would be deducted from an award. I do know of people who claim rent and landlord and tenant state on the form it isn't inclusive of bills when it is, but that would be fraudulent to do that just to get the full rent asked.

When claiming for room rent it is uncertain how much will be paid. I would say the best option is to get a pre tenancy check done to find out how much the person would be entitled to.

Claims can take several weeks so you would have to wait for that to be sorted out so there would be a delay in that.

Payment is usually paid fortnightly in arrears to the claimants bank account or direct to the landlord 4 weekly in arrears.

If I was a landlord I would ask for it to be paid direct as some tenants I know of spend the rent as soon as they get it, making them end up seriously in arrears.

seven-day-weekend

If she is a lodger, she should not pay CT. I would make it all-inclusive, except telephone, and adjust rent accordingly.

HB gets paid every four weeks (or did a few years ago, I assume it's still the same) ; i.e. 13 times per year.

However, AFAIK, HB does not include any money for bills.

Maybe it may be better to have a different lodger.

ethelhead

Housing Benefit will only assess entitlement to eligible housing costs. If you charge an inclusive rent, you can calculate proportionate fuel & water rate charges and specify these in your licence agreement/weekly "rent" book. (There's space on the claim form to put these figures down). These will be deducted from the gross rent for HB calculation purposes. If you don't specify these charges, the authority will use fixed deductions at the following rates (applicable for having sole occupancy of one room):
Heating and hot water and lighting £7.15
Heating and hot water £6.68
Heating and lighting £6.45
Heating £5.98
Cooking £1.40

As these standard deductions are imho unreasonably high - after all £8.55 per week equates to over £36 pcm for fuel costs - it usually makes sense to charge an exclusive rent, and specify water supply & sewerage. (If it's only you & one lodger charge a half or one third - I usually work out what a third is, in my case £1.48 per week, as I think it's fair that I bear the bulk of the charge as the householder). You can then come to a separate arrangement with the lodger about a fair proportion of the gas & lecky bills over & above the rent.

Getting a pre-tenancy determination is a good idea. With regards to the length of time for a claim to be processed, how long is a piece of string? Local authorities (or their contracted out claims service) can take a couple of weeks or months.

If the lodger is in agreement, they can specify that they would like benefit entitlement paid direct to you on the claim form, and you may wish to draw up a form whereby they also sign their consent to allow the local authority to discuss the claim with you. Without that data protection laws apply. If the "tenant" doesn't agree and wants to have the benefit paid to themselves, you would have a right to request direct payments only if the tenant accrues arrears of more than 8 weeks rent.

In order to set up a rent direct facility for payments to you as the landlord/lady, the local authority will normally require written evidence that you own the property (e.g. mortgage statement/Council tax bill) and a signed indemnity whereby you agree to pay back any overpaid benefit - regardless of any arrears that the tenant may have accrued.

Housing Benefit will be paid 4 weeks in arrears.

Don't forget that if you're currently entitled to a single occupier discount on your council tax, this will be lost.

If you yourself are also in receipt of means-tested benefits some of the "rent"/licence fee you receive will be taken into account as income. I won't go into that here.

Although this may sound somewhat complicated & daunting, if you & your lodger are organised about keeping on top of the claim, reporting changes of circumstances in a timely manner etc. it shouldn't be too problematic.

Best of luck

honeychurch

Thanks all for the very helpful information. I was planning on charging for CT as i would lose my single person discount, perhaps i will need to take this into account when considering the rent i change instead.
Fortunately I can be a bit flexible, especially as I would be letting to someone i know and not a stranger which has its own advantages.

musey

No a pre-tenancy is not binding. It has nothing to do with the actual benefit entitlement of a person it is to do with whether the rent charged is deemed to be a fair rent for the property in question.

For example.

3 bed house - rent £400pcm
The pre-tenancy may indeed find that this is a fair rent for a property of this type in that area.

However should the tenant actually not require a 3 bed house, perhaps a couple & 1 child (so they actually require a 2 bed house) it is quite likely the benefit paid will not cover the full rent.

Chrysalis

so whats the point of a pre tenancy agreement then if it has no affect on the rewarded claim?

seven-day-weekend

Chrysalis wrote:

so whats the point of a pre tenancy agreement then if it has no affect on the rewarded claim?

AFAIK it's an assessment of whether the accommodation is worth the rent charged.

But the Housing Benefit people will not pay for e.g. a single person to live in a three-bedroom house, even if it IS a fair rent. They will only pay the rent for a bedsit, as they say this is all a single person needs. They WOULD pay the full rent for a family with children to live in the house.

Single people are not entitled to much at all.

Chrysalis

right so basically its an assesment of if the rent is right for the area, but isnt an assessment of what you get due to personal circumstances. They should reword it accordingly as I can guess it misleads many people.

I can understand why a single person shouldnt get a 3 bedroom house, but I think the current laws restricting single under 25s to bedsits is harsh. It assumes they have help of parents or goto uni at that age.

Incidently lif you lucky when enquiring about housing benefit just tell the advisor number of rooms and post code and they can check what is been paid out in the area and for what rent, this should give you an idea what they deem as fair rent for the area.

snapcracklepop

Just curious what would happen in the 'rent a room' scheme under the following circumstances;

Two people live in the house.

The landlord is a full time student
The lodger is in receipt of incapacity benefit, housing benefit etc.

Does the landlord have to pay the council tax even though he is exempt?

Does he get the 25% discount?