Renting from family and housing benefit

gillip

Just to get back on topic!! as I am confused, can i ask,

I have a property i have been renting out commercially for 10 yrs my tenants have vacated and my sons ex girlfriend ..who also has his child, my grandchild, wants to move from her 2 bed flat to this 2 bed house (owned by me) she is currently receiving housing benefit and the rent is the same amount...will this be a problem (her son being my grandosn) and will she still be entitled to claim housing benefit...we are anxious to know as she needs to give notice and I need to relet to pay the mortgage. My grandson has my surname (my sons surname) so they will see there is some connection I imagine, and we wonder if this will be create a problem
Any 'sensible' help advice would be much appreciated
Thanks

just-some-guy_2

i'm in a similar situation and keen to know how you got on. are you now renting to a family member? what obstacles were there and how did you overcome them?

phoning my LHA tomorrow but if there is any info I can get in the meantime, it would be helpful.

shjo558

just-some-guy wrote: »

i'm in a similar situation and keen to know how you got on. are you now renting to a family member? what obstacles were there and how did you overcome them?

phoning my LHA tomorrow but if there is any info I can get in the meantime, it would be helpful.

If the tenancy is genuiune then there shouldn't be a problem although you/tenant may be asked to clarify some information.

The Council will check if the rent is reasonable, if you've let the property before etc.

Have a look at the legislation (heavy reading though:rolleyes:) http://www.opsi.gov.uk/si/si2006/20060213.htm#9 and it's Regulation 9 that you need to research.

Be honest on the application as they will run background checks and things always appear more dubious to benefit assessors if they spot something not declared in the first instance.

hollygorman

can i rent my property to my mother in law who is retired and not working . i have a buy to let mortage she can not afford the rent where she is a will have to apply for housing benefit .we will only charge the minimum rent so there will be no profit .is there any problem s we need to know about ?

rogerblack

hollygorman wrote: »

can i rent my property to my mother in law who is retired and not working . i have a buy to let mortage she can not afford the rent where she is a will have to apply for housing benefit .we will only charge the minimum rent so there will be no profit .is there any problem s we need to know about ?

You must charge a market rent, and you must evict her if she does not pay this.
Anything else will be seen as a contrived tenancy.

I am unsure if random occasional gifts of money to cover any shortfall would fall within the letter of the law.
They are clearly outside its spirit, and a risk.

HappyMJ

rogerblack wrote: »

You must charge a market rent, and you must evict her if she does not pay this.
Anything else will be seen as a contrived tenancy.

I am unsure if random occasional gifts of money to cover any shortfall would fall within the letter of the law.
They are clearly outside its spirit, and a risk.

Nothing says in law a landlord must charge market rent. It's best to charge the same amount or slightly higher rate as the LHA rate and as that reflects the average rent of an area anyway it will be very close to the market rent.

rogerblack

HappyMJ wrote: »

Nothing says in law a landlord must charge market rent. It's best to charge the same amount or slightly higher rate as the LHA rate and as that reflects the average rent of an area anyway it will be very close to the market rent.

It has to be a 'commercial' tenancy - which will practically mean something close to market rent.

http://www.northwarks.gov.uk/info/200315/council_tax/195/all_about_benefits/4

In addition, you will not be able to get Housing Benefit if:

• The Council makes the decision that your tenancy was only arranged so that you could claim Housing Benefit. This is called a "contrived tenancy".
• The Council makes the decision that your tenancy is not commercial.

HappyMJ

rogerblack wrote: »

It has to be a 'commercial' tenancy - which will practically mean something close to market rent.

Above or below market rent though? If the LHA rate was £100 and the rental yield of the property should really be £120 maybe as it's a 2 bed place and the tenant is only going to get a 1 bed rate of LHA then the council are never going to know that you are charging less than market rent unless they suspect something and then pay for a valuation (for which they can't have access to the inside of the property anyway unless they apply through a court) and then take it to tribual due to the tenant appealing. If the landlord was charging £80 then it saves the council money as they don't have to pay as much out. Again...There is no law that says a landlord must charge market rent. Your translation of it is not how I translate it.

bobajob_1966

HappyMJ wrote: »

Above or below market rent though? If the LHA rate was £100 and the rental yield of the property should really be £120 maybe as it's a 2 bed place and the tenant is only going to get a 1 bed rate of LHA then the council are never going to know that you are charging less than market rent unless they suspect something and then pay for a valuation (for which they can't have access to the inside of the property anyway unless they apply through a court) and then take it to tribual due to the tenant appealing. If the landlord was charging £80 then it saves the council money as they don't have to pay as much out. Again...There is no law that says a landlord must charge market rent. Your translation of it is not how I translate it.

rogerblack's interpretation is correct. The LA will already know what market rates are in their area, and if the tenant wishes to dispute it, it is very simple to get a Rent Officer to visit. If the RO is denied access to the property, they can do a 'drive by' valuation.

HappyMJ

bobajob_1966 wrote: »

rogerblack's interpretation is correct. The LA will already know what market rates are in their area, and if the tenant wishes to dispute it, it is very simple to get a Rent Officer to visit. If the RO is denied access to the property, they can do a 'drive by' valuation.

Exactly that's why I'm saying charge the LHA rate to family as it IS the market rent. There will be no shortfall and no excess to pay. And as you say it is the tenant that has to raise a dispute not the council. The tenant isn't going to complain the rent is too low and if it's too high they'll rent elsewhere. As LHA is now at the 30% of properties are affordable point it's very hard for enterprising familes to profit out of LHA.