lodger is on benefits, council tax benefit??

TheAnalyst

Hi all,
I'm a home owner I've lived by myself up until now. I am taking on a lodger who is currently on JSA. Their £300 rent will be paid via housing benefit.

My council tax is £140 (without the single person occupancy as there's now two people in the flat). How much of this £140 can my lodger claim on council tax benefit? I'm guessing £70 as that would his share?

As I'm the homeowner the council tax bill comes straight to me and is paid by me... so at what stage is the lodgers share taken into account and how is it deducted?

Anyone know?

nimbo

council tax will only ever discount 25%.....

so they will knock off £35 like they did when you lived alone.

you should have factored this into his rent when you came up with a price.

HappyMJ

You can claim Second Adult Rebate from the council.

Benefits_Bod

The hierachy rules mean your lodger is not (and cannot be) liable for council tax. The full, non-discounted, liability is yours alone.

Council Tax Benefit is only (potentially) payable to persons who are directly liable for council tax. Therefore, your lodger cannot be entitled to CTB.

In principle, there is nothing to stop you passing this on to your lodger - the additional liability passed on by you would simply be extra rent from the lodger's perspective.

As to whether your lodger would, at this stage, be entitled to further housing benefit will depend on exactly what was agreed at the outset between you both to the extent of whether or not there was any built-in clause relating to a rent increase. If not (and this appears to be the most likely situation), there will be no additional HB - the original level of rent will "stick" for HB purposes; even if you decide to increase the actual rent as of now.

{Edited to add}: Second adult rebate (SAR) is an alternative version of Council Tax Benefit that can be claimed by you. Somewhat confusingly, the amount of YOUR CTB (SAR) will depend on the circumstances of the lodger. Bear in mind, that it will by YOUR responsibility to notify the Council of changes in circumstances that you might reasonably be expected to know might affect your entitlement to CTB.

{2nd edit}: If there is entitlement, CTB (SAR) will amount to 25%, or 15%, or 7.5% of your council tax liability, apportioned pro-rata over the year.

TheAnalyst

Thanks for the replies, the lodger is actually an old friend. they moved in just yesterday and there's no "formal" agreement as such, yet were just filling in the housing benefit forms this evening.

I was looking to charge £375 "all inclusive" for a working lodger a few months back but never followed it up... our local authority will pay a maximum of £69.23 per week housing benefit or £300 a month for a "one bedroom shared facilities" rate which is a bit less then I'd hoped for but it's still £300 a month more than I'm getting at the moment. I'm told this is the maximum so there's not really any way to increase this to cover any additional council tax due.

I just wondered if there was any way to reduce my council tax liability at all given the 2nd occupant is on benefits.

Cheers.

fluffymovie

HI there

Just to let you know that as has been said, your lodger cannot claim Council Tax benefit and you would not be entitled to Second Adult Rebate as the 2nd person is paying you rent to live there.

Who can be a second adult?

A second adult is somebody who is 18 or over, who is living in your household on a non-commercial basis. A second adult can be:

• an adult son or daughter
• a relative
• a friend

A second adult cannot be:

• a partner
• a tenant/boarder
• a joint tenant
• a person who is disregarded for council tax purposes such as a student.

You cannot claim second adult rebate if you have a partner or if the second adult has a commercial liability to pay you rent.

Your only option is to factor in the increased charge in the rent that you charge.

Also, if there is no formal tenancy and you are happy to accept a lower rent that you want, because they are a friend, then Housing Benefit may not pay anything as they may consider that the tenancy is not on a commercial basis.

Benefits_Bod

fluffymovie wrote: »

HI there

Just to let you know that as has been said, your lodger cannot claim Council Tax benefit and you would not be entitled to Second Adult Rebate as the 2nd person is paying you rent to live there.

Doh - quite right. I completely overlooked that... *slightly embarrassed*

fluffymovie wrote: »

Also, if there is no formal tenancy and you are happy to accept a lower rent that you want, because they are a friend, then Housing Benefit may not pay anything as they may consider that the tenancy is not on a commercial basis.

There is no legal requirement for there to be a written agreement in order for HB to be payable. In law, a verbal agreement is sufficient. In the event a claim for HB was rejected and this issue was the "make or break" matter of contention at any subsequent Tribunal appeal hearing, it would almost certainly boil down to the credibility of the claimant (and landlord if he also appeared as a witness).

However, as fluffymovie rightly points out, any agreement (whether in writing or not) must be on a commercial basis.

fluffymovie

Indeed BenBod but just thinking about what the OP has said about the lodger being a friend, accepting less than they want, charging what HB will pay.... all of these would raise red flags to me and if I was made aware of these factors, I would take the case to FtT

Benefits_Bod

I wouldn't quite be hanging it out to FtT (Appeal Tribunal) on the info so far, but I'd certainly be considering the usual questions such as:

- how did the tenant hear about the accommodation?
- was other accommodation considered (if not why not? / if so, why declined?)
- would it be let to anyone else? (possibly - OP indicates he considered this)
- would the tenant be evicted if rent not paid?
- would rent be charged if HB not payable?

And so on....

TheAnalyst

Thanks again for the replies.

It is on a commercial basis, I need the money and it would have been another lodger had it not been this person. I am willing to accept that while the lodger is not working then the maximum I can expect is £300 from the local authority. I honestly would not feel right taking more from the lodgers JSA

When the lodger starts working then the rent will still be £300 but + share of bills

If it's not paid then he's out the door, make no mistake about that!

I'll get one of the downloadable agreements filled in for lodgers to be sure everything is above board.

Thanks again.

Benefits_Bod

TheAnalyst wrote: »

I'll get one of the downloadable agreements filled in for lodgers to be sure everything is above board.

Thanks again.

Be careful - is it a licence, or a tenancy agreement? A tenancy offers greater rights than a licence, so it will pay to be sure what the agreement actually says. In terms of evidence for HB, a letter by the landlord should normally suffice, stating the date of commencement of the arrangement and the amount of rent due.