Advice please, uncommon situation

Mrs_pbradley936

I own a house (no mortgage) and when it was between lets I let a family member move in. They had just sold and not as yet bought. The arrangement was supposed to be temporary. There is no tenancy agreement nor deposit involved so far they have been paying the rent but have announced that they are in financial difficulties. I suspect I may be in for a sob story but what are the legalities involved?

BitterAndTwisted

If they are in financial difficulties and need to apply to their Local Authority for LHA they will most probably need a to show a formal rental agreement in order to claim it. This might be a good time to regularise their situation by drawing up an AST, taking a (modest) deposit and lodging it with one of deposit-protection schemes.

Then you may get a regular, reliable rent coming in and be able to legally evict them should you need to at some point in the future. Not that taking the decision to evict family would be an easy one, I accept.

Mrs_pbradley936

BitterAndTwisted wrote: »

If they are in financial difficulties and need to apply to their Local Authority for LHA they will most probably need a to show a formal rental agreement in order to claim it. This might be a good time to regularise their situation by drawing up an AST, taking a (modest) deposit and lodging it with one of deposit-protection schemes.

Then you may get a regular, reliable rent coming in and be able to legally evict them should you need to at some point in the future. Not that taking the decision to evict family would be an easy one, I accept.

I am not sure if they would get housing benefit they had £40k in equity from the sale of their house. BUT I thought it could not be paid to a family member anyway. Or am I mistaken about that?

rosyw

Not sure if things have changed but a number of years back my OH bought a house for my MIL to live in, she got housing benefit which was paid directly to him.

BitterAndTwisted

I'm honestly not clear on the details of being able to receive LHA from family members but I believe the entitlement to LHA is based on income and the property-size needs of the family in question, not about what savings they may or may not have.

Of course a curious outsider would want to know why they are having financial difficulties now if they did indeed realise £40k from the sale of their property.

Regardless, I'd encourage them to sign an AST just in case you need to move them on at some point if you're not minded to risk having family living rent-free in your property indefinitely

Annisele

In theory LHA can be paid if the T rents from a family member - but not if they are deemed to have a "contrived tenancy". In essence, if the tenancy isn't on a commercial basis (eg you charge rent when the T is in work but not otherwise; you wouldn't evict the T if he didn't pay; the tenancy is deemed to have been created in order to get LHA etc) no LHA will be paid.

Person_one

You can receive LHA for a property owned by a family member as long as it isn't a 'contrived tenancy' set up purely for the purpose of claiming.

If you can demonstrate that they were paying you regular rent for a reasonable period of time before the claim then the fact that there's a family relationship shouldn't be an issue. Lack of a tenancy agreement might make it trickier to prove though.

puddy

the threshold is 16k for savings, so no, they wont be entitled

Jowo_2

Assuming the property is in England/Wales, you regain possession of the property this way

http://www.landlordzone.co.uk/Legal/Residential/Tenancies/ending-assured-shorthold-tenancy.htm

http://www.landlordzone.co.uk/Possession.htm

How long have they lived in the property?

Mrs_pbradley936

Jowo wrote: »

Assuming the property is in England/Wales, you regain possession of the property this way

http://www.landlordzone.co.uk/Legal/Residential/Tenancies/ending-assured-shorthold-tenancy.htm

http://www.landlordzone.co.uk/Possession.htm

How long have they lived in the property?

Almost 7 months

Jowo_2

What do you plan to do? Serve notice on your tenant (relative) now? Will this cause ructions in the family because of the relationships involved? Do you expect that they will soon stop paying the rent?