Housing Benefit Five Year Rule

Wixie99

Three and a half years ago my friend and her husband sold their little house to their son, and then paid him rent to cover his mortgage (before anyone screams, I plead on her behalf "mother love"). However, having had a few good holidays and subsidised said son, they have now run out of money and are on Pension Credit.
They have been refused Housing Benefit because they once owned the house. Her husband found out about the five year rule, which says they will be entitled to Housing Benefit once five years have elapsed since the sale.
Our local Council and MP's secretary (a former Housing Benefit Officer) both deny the existence of this five-year rule. While they are both doing cleaning jobs to make ends meet, they would like a little light at the end of the tunnel. My husband thinks they are a pair of twits, but I think we are all entitled to make a mistake now and then.
Does anyone have a few words of advice to help them along, please?.
Thanks in advance

AnxiousMum

So - they have sold a house, have taken all kinds of holidays using up the money they realised from the sale, and now they want the housing benefits? Were they payng inflated rent to their son?

alwaysonthego_2

You may be excluded from Housing Benefit by this rule if you pay rent to a close relative who also lives in the home, or to a former partner for the home where you used to live together. It can apply if you pay rent to a company or trust that you have some connection with. It can also apply if you (or your partner) used to own the home and your ownership ended within the last five years.

http://www.adviceguide.org.uk/index/your_money/benefits/help_with_your_rent_-_housing_benefit.htm

As my link highlights although the 5 year rule does exist they will not get LHA/HB unless they have a proper tenancy agreement etc.

Macro_3

I'm not sure why a former HB officer would deny the existence of one of the most basic HB regs:

"Circumstances in which a person is to be treated as not liable to make payments in respect of a
dwelling
9.—(1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not
so liable where— ...

...(h) he previously owned, or his partner previously owned, the dwelling in respect of which the liability
arises and less than five years have elapsed since he or, as the case may be, his partner, ceased to
own the property, save that this sub-paragraph shall not apply where he satisfies the appropriate
authority that he or his partner could not have continued to occupy that dwelling without
relinquishing ownership;"

As has been mentioned, the whereabouts of the capital released from the sale and the commerciality of the tenancy agreement may be an issue once the 5 years have elapsed.

Wixie99

Thank you for your replies.
As I understand it, initially they just paid the rent into their son's bank account, but when they realised they needed a proper agreement etc, they took legal advice and now it's paid via a Solicitor.
Cash-wise, we live in one of the poorer areas of the country, so I think they only had about £60k to play with, as they sold it to their son at a knock-down rate.
In their defence, they have both worked all their lives, but had no savings as they went without while the son led the high-life, and I believe he had more benefit from the £60k than they did!
And Macro, I don't know why the Housing Benefits officers will not admit this rule, but at the moment they are adamant they have never heard of it (and if they haven't heard of it, it doesn't exist), and my friends are wondering how they can proceed.

seven-day-weekend

So they have spent £60k in 3.5 years and now expect the State to keep them.

To me this seems like a 'let's scam the system' which has not worked out quite as they expected.

Even after five years they may not be entitled to Local Housing Allowance as spending that amount in that time on frivolities may be classed as Deliberate Deprivation of Capital and they will be treated as though they still have it.

Oldernotwiser

I agree with 7DW, the deprivation of capital rule is likely to be more of a problem than the 5 year rule, fortunately.

bigbill

As Pension Credit is a passporting benefit to full HB & CTB (normally) it is not the previous capital that is causing the problem as HB cannot over rule the passport benefit.

It follows therefore that HB must be seeing it as either a contrived tenency or applying the 5 year rule, the option to rent somewhere else is available.

Macro_3

bigbill wrote: »

As Pension Credit is a passporting benefit to full HB & CTB (normally) it is not the previous capital that is causing the problem as HB cannot over rule the passport benefit.

It follows therefore that HB must be seeing it as either a contrived tenency or applying the 5 year rule, the option to rent somewhere else is available.

Assuming that they are on guarantee credit, which is a passport benefit, rather than savings credit, which is not.

bigbill

Macro wrote: »

Assuming that they are on guarantee credit, which is a passport benefit, rather than savings credit, which is not.

True but HB must still use the income and capital figures given to them by Pension Credit (Savings)

sassysar

Howabout stopping paying their son rent! Sounds like hes had a free house already