Housing Benefit - buying a flat for our disabled daughter

clemmatis

bobajob_1966 wrote: »

I am guessing you have not ever dealt with them - they don't know half the stuff that is within their remit, let alone something way off like this.

well yes -- I haven't dealt with the Commission.

I hope the OP can get advice -- it's my feeling you could advise/give information given links to the articles, that would be great.

pmlindyloo

bobajob_1966 wrote: »

That is incorrect - the fact that she would be entitled to LHA/ HB elsewhere is irrelevant.

Those in receipt of DLA MRC or higher are entitled to the one bedroom rate, irrespective of age.

I hold my hand up to not explaining it very well. This previous post is explaining it much better.

Quote
A contrived tenancy is not defined as one set up to rent to as specific person, and the rules do not have any reference to renting a property to a family memeber. (they do have rules about rent where you live with the family member).

The actually issue with contrived tenancies is if they have been set up to "take advantage" of the HB scheme.

The simplest situation that this can be resolved from is where the person in question is already receivng HB. You cannot be taking advantage of it, as it's already paying out.

It might be "convenient" to rent to/from family, it might even be easier, and it might even give you both a financial boost, but the alternative may well be that the same HB could be paid to another LL, so in this scenario there is no issue with "taking advantage" of HB.


Anyway,:) if OP's council is happy to pay HB at the shared room rate in the acquired flat then the crux of the matter is to find out the legislation re: the 1 bedroomed rate for a disabled person.

I see you have said the 1 bedroomed rate applies if they are receiving such and such - very helpful. Do you happen to know the legislation which backs this up? I can't find it, just mention of the 1 bed rate applies if you are severely disabled (on various council websites.)

bobajob_1966

pmlindyloo wrote: »

I hold my hand up to not explaining it very well. This previous post is explaining it much better.

Quote
A contrived tenancy is not defined as one set up to rent to as specific person, and the rules do not have any reference to renting a property to a family memeber. (they do have rules about rent where you live with the family member).

The actually issue with contrived tenancies is if they have been set up to "take advantage" of the HB scheme.

The simplest situation that this can be resolved from is where the person in question is already receivng HB. You cannot be taking advantage of it, as it's already paying out.

It might be "convenient" to rent to/from family, it might even be easier, and it might even give you both a financial boost, but the alternative may well be that the same HB could be paid to another LL, so in this scenario there is no issue with "taking advantage" of HB.


Anyway,:) if OP's council is happy to pay HB at the shared room rate in the acquired flat then the crux of the matter is to find out the legislation re: the 1 bedroomed rate for a disabled person.

I see you have said the 1 bedroomed rate applies if they are receiving such and such - very helpful. Do you happen to know the legislation which backs this up? I can't find it, just mention of the 1 bed rate applies if you are severely disabled (on various council websites.)

I don't know the legislation offhand - but the 'severe disability' criteria is basically the same as those who would qualify for the severe disability premium in means tested benefits. Pretty sure it is confirmed on the Rent Service/ LHA website also.

Your understanding of contrived tenancies is not correct. Someone that is already receiving HB at another address can move and then become part of a contrived tenancy. You are focusing on the claimant's eligibility for payment, which is not the main issue.

Hammyman

OK. I have had a word with my brother.

It would be deemed as being a contrived tenancy as you are currently planning to do it. The fact she is disabled has no relevance - there are no discretions or exceptions to the contrived tenancy rules because of disability. The only thing that disability does affect is that instead of getting the "room in shared house" rate of LHA she would get the single bedroom flat rate which is an additional 10% or so - i.e £300 instead of £270.

The only way around the contrived tenancy is to let out the property for at least 6 months, and ideally 12 months, to a non-relative as a proper commercial tenancy and then rent it to your daughter. For it still to not be counted as contrived the rent would have to be near the market level. Although the council may say that the going rate is £485, 75% to 80% of that would be accepted. £270 wouldn't and it would still be seen as contrived if that was the level you set it at.

He also said that to be aware that the LHA rules are changing in January that the under 25 rate will now apply to under 35s and it will be lowered to 30% however those on disability and with kids etc will be at the current levels.

Hope that helps.

bobajob_1966

Hammyman wrote: »

OK. I have had a word with my brother.

It would be deemed as being a contrived tenancy as you are currently planning to do it. The fact she is disabled has no relevance - there are no discretions or exceptions to the contrived tenancy rules because of disability. The only thing that disability does affect is that instead of getting the "room in shared house" rate of LHA she would get the single bedroom flat rate which is an additional 10% or so - i.e £300 instead of £270.

The only way around the contrived tenancy is to let out the property for at least 6 months, and ideally 12 months, to a non-relative as a proper commercial tenancy and then rent it to your daughter. For it still to not be counted as contrived the rent would have to be near the market level. Although the council may say that the going rate is £485, 75% to 80% of that would be accepted. £270 wouldn't and it would still be seen as contrived if that was the level you set it at.

He also said that to be aware that the LHA rules are changing in January that the under 25 rate will now apply to under 35s and it will be lowered to 30% however those on disability and with kids etc will be at the current levels.

Hope that helps.

Just to clarify, they would need to be deemed 'severely disabled' to qualify for the one bedroom rate i.e. those on LRC would not qualify.

The 30% refers to the 30th percentile (whereas the rate was previously set at the 50th percentile), and there is no special protection for vulnerable groups.

real1314

bobajob_1966 wrote: »

I don't know the legislation offhand - but the 'severe disability' criteria is basically the same as those who would qualify for the severe disability premium in means tested benefits. Pretty sure it is confirmed on the Rent Service/ LHA website also.

Your understanding of contrived tenancies is not correct. Someone that is already receiving HB at another address can move and then become part of a contrived tenancy. You are focusing on the claimant's eligibility for payment, which is not the main issue.

Having an already established entitlement is one of THE central issues in contrived tenancies.

Who the Landlord is, is not really a criteria at all.

In the past, the way the rent was set was one of the main isses with contrived tenancies.

e.g the typical 2 bed house rent in an area might be £100 a week. However the HB limit might be £125 a week.
If a LL was renting to working people at £100 a week, to enable them to compete in the market; But when they had HB tenants they charged £125 a week, the tenancy would (should) be seeen as contrived.

i.e It creates a situation where the entitlement to HB is greater than would otherwise be obtained, hence taking advantage of the HB system

A tenant getting £100 a week HB for a property who then moves to a similar property owned by a parent, at a similar rent, and where the parent does not live, would (should) not be seen as contrived as there is no greater entitlement to HB. There have been Commissioner's decisions on that very principle. :cool:

bobajob_1966

real1314 wrote: »

Having an already established entitlement is one of THE central issues in contrived tenancies.

It is by the by - if there was no entitlement the issue of whether there is a contrived tenancy would not even be in question.

I agree with the rest of your post, but the example given does not relate to the above statement.

fluffymovie

Hello there

This is a tricky one but I dont think you have been given the whole picture as we seem to have gotten caught up on the issue of contrivance... Having been to 2 HB appeals on the regulation recently, I would hope I can give some insight from the HB side of things

Regulation 9 of the HB regs 2006 tells us when we need to treat someone as not liable even though they may be and there are 2 key points within this regulation
1) Non Commercial
2) A tenancy created to take advantage of the scheme

Basically if the HB dept decide that you are not letting the property to the tenant, in this case, on a commercial basis, they could refuse HB. This means managing the tenancy "at arms Length", would you treat any other tenant the same as this one? What would you charge in rent, would you evict for non payment, have you asked for a lower figure than your mortgage etc. These are all considerations that the HB office will take into account when deciding if you are acting as a)Parents or b) landlords.

If the LA believe that the tenancy is a sham, then this is contrivance. For example, your daughter lives in this flat for a year paying a small amount of rent whilst working. She loses her job, claims JSA and then makes a claim for Housing Benefit. You increase the rent to the LHA rate. As this was done to 'take advantage of the scheme', this is considered a sham tenancy / contrived and HB would be refused.

This is a very difficult area and I am seeing a lot more parents who want to provide for their children with disabilities. However, as you have said that you could only just afford it, I really wouldn't want to see you risk this when you appear to have received an indication from HB that the claim will not be successful.

As I say, I have recently attended 2 appeals on the subject and they took over 12 months to be heard. Say you went ahead and bought the flat, HB was rejected, could you really cover the mortgage for 12 months or more until the appeal was heard?

real1314

bobajob_1966 wrote: »

It is by the by - if there was no entitlement the issue of whether there is a contrived tenancy would not even be in question.

I agree with the rest of your post, but the example given does not relate to the above statement.

Whilst having an entitlement would be a factor likely to influence against a tenancy being deemed contrived, not having a current entitlement does not mean that a contrived tenancy decision is automatic. Therefore saying "if there was no entitlement the issue of whether there is a contrived tenancy would not even be in question" is not accurate.

The issue of the tenancy is run on a commercial basis is the other criteria (as fluffy has stated).

Sanzomat

Thanks for all the replies, what a busy forum! I’ll try to answer some of the questions and clarify a few things.
Here is a link to an interpretation of the law that seems to make good common sense but I acknowledge that this is just a point of view. The law itself is very unclear and there seems to be very little case law or appeal results (that I could find) to help clarify things so the various LA’s are having to make their own interpretations and their own internal rules/guidelines seem to vary from LA to LA but seem to be strictly enforced by their officers even though the basis in law seems quite flimsy.
.ownershipoptions.org.uk/pdf/Buying%20to%20let%20to%20a%20relative.pdf (www omited as aparently as a new user I can't post links)
My daughter’s current benefits are DSA with higher rate mobility and lower rate care plus ESA and she has previously claimed HB (at “room in a shared house” rate).
Her health professionals and social worker all think she was incorrectly assessed at lower rate care and have urged us to get her reassessed but the stress of this has put us off and as we’d found a way to make things work on LRC we decided to stick with this.
In our LA the “shared” rate HB is £270 and the one bedroom rate is £495 so quite a difference. If she was on MRC she would be entitled to the one bedroom rate.
She tried moving out into a room in a shared house but it didn’t work out for all sorts of health related reasons and also not being able to have her dog with her.
Since then we’ve been trying to find a solution that enables her to have accommodation suited to her needs. Living at home is okay to a point but if that were to continue we’d have to invest in some adaptations such as a downstairs shower but she needs to have a degree of independence to find a way to live her own life (in whatever compromised form it takes).
She is fully entitled to a “room” on HB but this doesn’t meet her needs.
She could get a 1 bed flat from a private landlord and claim the room rate HB and we could gift her the difference so she can pay the rent but then we would be £225 pm out of pocket and even then we can’t find anything that suits her needs and will take the dog.
The only option that we can find (and we’ve done a lot of looking) is to buy this flat and rent it to her. From the economics point of view this works out as our costs in buying/owning it roughly equal the room rate HB so it seems like a great solution as she gets accommodation suitable to her needs, the LA pay the same HB rate they would pay for a room and we aren’t out of pocket (except our savings are tied up in a flat rather than being liquid). Seems like a no-brainer from everyone’s point of view.
The common sense view of the law is that she should be entitled to claim HB as there is a genuine need for her to have suitable accommodation, she is entitled to leave the family home and the reason for setting up the tenancy are these i.e. genuine reasons and not set up to take advantage of the HB system. It will be a commercial tenancy as the obligation to pay rent will be set up though a proper legally binding tenancy agreement. In law these seem to be all the tests that need to be overcome. The law makes no requirement for the level of the rent to be at market level and although there are cases to demonstrate that a rent set too high to deliberately get more form the benefit system represents contrivance there doesn’t seem to be any guidance for when the rent is set “too low” as I guess this isn’t often a problem. The barriers come from the rules set up by the LA in their interpretation of the law.
Our LA are saying that if the rent is set below market level (and they define this as the LHA rate for a 1 bed flat so £495) then they will deem it to be not commercial/contrived. From our conversations with them it seems that they are prepared to award HB (at the room rate) as long as the rent is set at £495 plus a few other things like we have to say that if she doesn’t pay then we will evict her (this is in the tenancy agreement anyway).
We’ll go with this for simplicity but it isn’t ideal and to us is a nonsense. If the rent is set at £495 and she gets £270 HB we’ll have to gift her £225 pm and she’ll pay it straight back to us but we’ll then have to pay tax on this amount as income. We’ll only be worse off by the tax on £225 and this is a relatively small price to pay to help meet our daughter’s needs but it just seems plain silly and not in the spirit (or word) of the law and just going along with the LA interpretation. Not ideal but at least it works. The only option to get common sense set into case law seems to be to try at the lower rent, get turned down, apeal, take it to a tribunal, win, establish a case law precedent for others to use! Unfortunately I don't have the stomach for this so we'll roll over and take the "easy" route even if we are worse off for no good reason!