Buying retirement flat, to rent out - advice please! (housing benefit rules)

brawlsadford

Thanks in advance for reading - I hope this thread will prove useful for others who may be in a similar situation...

My brother-in-law's wife's grandma's retirement flat is about to be sold out from underneath her and we* are in a position to buy the leasehold cash. (*my wife and I, my parents-in-law, and my father) Grandma-in-law-in-law is in receipt of housing benefit to pay the rent. She would be tenant for as long as she is able to live independently in the flat.

I am assuming that housing benefit rules would permit Grandma to continue claiming when the leaseholders include her grand-daughter's parents-in-law? Could it become an issue when one of the landlords' surnames is the same as the grand-daughter (who, as various agencies are aware, takes care of all her finances). Perhaps, if it's legal, the tenancy agreement could just be countersigned by me, on behalf of our 'consortium', to save confusion.

At some point in the future, my father may want to live there. He would own around 20% of the lease and my wife and I would own around 30%. Could he make any (i.e. partial) claim for housing benefit, assuming he were otherwise eligible? Perhaps a 50% claim on the basis of my in-law's holding? Or would we need to sell our stake on?

I appreciate that housing benefit regulations are subject to change over time, just wondering if someone knowledgeable in this field could clarify what the current position is? If there is a better way for the parties involved to actually make the purchase, in order to smooth future housing benefit claims (or income tax liabilities!) then I'd gladly hear that too.

Cheers!

Wee_Willy_Harris

What would happen if, with the best will in the world, you bought the flat and HB refused to pay on your brother-in-law's wife's grandma's subsequesnt claim?

brawlsadford

We'd be up the proverbial creek and £6000 / year worse off.

I think, in practice, it is highly unlikely that she sends in the 'change of circumstances' form to the local authority - with one random name replacing another as landlord - and they arbitrarily decide to terminate her benefit.

It's my uneducated opinion that she can enter 'no' in the box that says "are you related to the landlord?" - and that HB is still payable.

I'm wondering if someone better informed than me can perhaps see an angle that I can't :think:

Wee_Willy_Harris

brawlsadford wrote: »

We'd be up the proverbial creek and £6000 / year worse off.

I think, in practice, it is highly unlikely that she sends in the 'change of circumstances' form to the local authority - with one random name replacing another as landlord - and they arbitrarily decide to terminate her benefit.

It's my uneducated opinion that she can enter 'no' in the box that says "are you related to the landlord?" - and that HB is still payable.

I'm wondering if someone better informed than me can perhaps see an angle that I can't :think:

So you wouldn't evict her then?

Oh, and ticking that "No" box is called fraud. It says so on the form, just where she signs her name. Surprised you didn't see THAT angle.

Whilst looking fo angles, "contrived tenancy" might be another one to check.

brawlsadford

I personally would be reluctant to evict her - she's had a tough enough life already.

If someone on the street asked me if I was related, in any meaningful way, to my wife's-brother's-wife's-grandma... my honest answer would be no. There're just too many marriages in there. If one wanted to be a pedant about it, then practically everyone in this country is 'related'.

This is not IMHO a 'contrived tenancy' - she is already the tenant of the property. She has a pre-existing liability to pay rent; we're not creating it. We're trying to keep a disabled, elderly lady in the home she loves, that's my angle. However, I do need to be financially responsible with my own family's savings.

The council will also want to check... that the arrangement has not been set up in order to take advantage of the housing benefit system - this is called a 'contrived tenancy'. For example, if your landlord only asks you to pay rent when you are not working (and so are eligible for housing benefit), but not when you are working (and earning too much to claim housing benefit), this would be a contrived tenancy.
(from Shelter)

Thanks for taking the time to reply: I'm guessing you have expertise in this area?