Helping mum...

Caz3121

You will probably get more help on the benefits board but there are 3 points
1) you cannot claim housing benefit for a property that you previously owned unless you had no option to sell..eg to avoid reposession
2) by selling for under market value she will have given away money as stated above by silvercar
3) paying non-priority debts off (eg credit cards) would be classed as still having the money

ViolaLass

mikmo wrote: »

I think it's key to note that the LHA payments claimed would only be what she'd be entitled to if she and my dependent brother moved to a suitable 2 bed house in the area.

There is no additional burden on the tax payer as suggested by some of the inflamed comments of others. As she can't afford the mortgage she will be moving to LHA and either renting from a private land lord... or renting the house from me (with the same level of LHA support) and me covering the additonal cost of the current house vs a smaller 2 bed.

That doesn't add up. If she were to sell, she would have a lot more money in the bank once all her debts were paid and might well not be entitled to the LHA support. So yes, she is trying to shift the burden to the tax payer.

mikmo wrote: »

I'm not 100% certain I'll require a BTL mortgage, again something to be discussed with LHA.

You intend to let the property long term ergo you need a BTL mortgage. Where's the difficulty?

And given that you and your mother are considering setting this tenancy up specifically so that she can claim more benefit money, you will struggle to argue that it is not contrived.

tbs624

silvercar wrote: »

Some lenders will be quite happy with someone obtaining a mortgage to house a parent.

Can't have it both ways - if the property is to be seen as a "commercial" let, so that LHA payments can be received, then a BTL mortgage is the way to proceed.

mikmo wrote: »

I think it's key to note that the LHA payments claimed would only be what she'd be entitled to if she and my dependent brother moved to a suitable 2 bed house in the area.

There is no additional burden on the tax payer as suggested by some of the inflamed comments of others. As she can't afford the mortgage she will be moving to LHA and either renting from a private land lord... or renting the house from me (with the same level of LHA support) and me covering the additonal cost of the current house vs a smaller 2 bed.

Run that one by us again? Your mother has a mortgage of 90k on a property which you reckon is worth 250k, ie there is equity of £160k which would be released by a sale. Why should someone who can release that level of capital from the sale of their property think it's okay for LHA to fund their living costs? Why could she not just buy a property that is within her means?

mikmo wrote: »

I'm not 100% certain I'll require a BTL mortgage, again something to be discussed with LHA. I have factored in the additional costs. This isn't a profit making exercise for me so not hugely relevant.

As someone else has pointed out it's not the Benefit Office who determine the mortgage product , it's your potential Lender.

You say it isn't a profit-making exercise for you, yet the deal for you would be that you end up with a property purchased from your mother at a considerable discount.

Further down the line, what happens to your brother when your mother is no longer around and the major "family" asset has passed solely to you at that knock down price?

BitterAndTwisted

I would have thought that as the OP plans to acquire a £250k property for a knock-down £120k they could fund the mortgage payments themselves and let Mum and Bro live there rent-free. Now, that's what I'd call an investment

Star1

Are you married, or do you plan to get married at any point? If so and you ever get divorced, remember that the house will be an asset and included in any divorce settlement

Also, as others have pointed out, google deprivation of assets in relation to benefits - your mother will be assumed to have the money in the bank relating to the 'gift' and to the additional £30k she's planning to use to pay off debts / go travelling so she wouldn't be able to claim means-tested benefits anyway

mikmo

Cheers for the answers guys, really helpful.

Clearly a lot of un-resolved issues for me to think about, many of which may make this un-workable.

I'll book a sit down with the LHA to discuss the issues raised.