can I rent to family who are on benefits?

Adapazari

Hi,
I will be living abroad in the future and I want to rent my house out to my daughter, who has a husband and two children. My son in law works and presently they are eligible to claim housing benefit but my daughter seems to think they would not be able to claim this if they rent from a family member.

I know someone who rents her house out to her elderly mother, who still seems to be able to claim benefits and she says it's all above board.

Does anyone know what the rules are please?

Many thanks

Jowo_2

The rules are that a landlord can rent out their property to a close relative so long as it isn't a contrived tenancy, one set up to exploit the housing benefit system. As long as its a proper, commercial tenancy and not one that's informal, or where the tenant doesn't pay rent when they work but does when they can claim Local Housing Allowance, for example.

You'll need to learn about your obligations and responsibilities as a landlord, housing law, etc, so join a national landlords association and attend one of their courses. The landlordzone website is a good source of information for landlords.

You also need to consider things like taxation, CGT.

Also, weigh up the risk of having a business relationship with a relative - mixing business and family can go wrong as petty landlord/tenant disputes can ruin a personal relationship.

Caz3121

it is possible to do it but it needs to be done properly - if you have a mortgage you need consent to let or change to a BTL mortgage, you would also need the correct insurances and a proper lease. I think it also helps to show that the property is available to rent on the open market and it is a proper tenancy.

Have a look at "Contrived Tenancy" and see what you think...some examples
Would you rent it out elsewhere if not to your daughter? Would you charge them a commercial rent and would that rent remain the same if they received benefits or not? Would you evict them if they did not pay the rent?


edit: typed too slow!

Adapazari

Thanks everyone. I'll look into it. By the time I'm ready to do it I will be mortgage free. I'm hoping to buy something abroad to live in and I thought I may as well rent to my daughter if I rent to anyone. Also they have problems with several new neighbours shipped onto the village housing association estate they live on. They are very noisy, always drinking and allowing children as young as 2 up until all hours. It's a nightmare. I thought it would be better if they lived in private housing, that way they can choose where they wish to live. I happened to be thinking about renting my house out at some point, so it seemed a good idea to rent to them. Of course I would want to make the arrangements official.

Thanks once again. At least I know it's possible.

pop_gun

i read recently from the direct.gov pages, rental income was non taxable if it could be shown to gross no more than 10% of the mortgage + any property repairs needed. although i'm not sure if CGT is a different beast altogether. maybe someone will enlighten me.

tbs624

Adapazari wrote: »

Thanks everyone. I'll look into it. By the time I'm ready to do it I will be mortgage free. I'm hoping to buy something abroad to live in and I thought I may as well rent to my daughter if I rent to anyone.

You'll also need to check out the rules about non-resident LLs(link)