2nd house on benefits?

BigAunty

A close relative can be a landlord and let their property to someone to whom they are closely related so long as it is not a contrived tenancy, i.e. set up to exploit the housing benefit system. For example, not charging them rent when they are in employment but charging them when they qualify for benefits.

A properly let and managed tenancy, done on a commercial basis,should not be interpreted as a contrived tenancy but check the rules with your local council and do more research in this area. there's loads of info out there on how to avoid being classed as a contrived tenancy.

As you are already aware, there is a risk that you may have to evict her. Mixing business and family, which is what you are proposing, is always tricky. A minor tenant/landlord issue can ruin family relationships.

As well as the risk to accessing means tested benefits yourself, are you aware about CGT which means that you can be clobbered with up to 28% of the gains when you sell up?

So, you want to spend your savings because you know under the move to UC, there is more means testing around the capital you have? Interesting.

sassysar

Thank you for your detailed answer. M in law more or less abandoned OH and she is not my favourite person in the world but we both still feel a responsibility towards her in her old age . I don't really expect to qualify for universal credit as by the time it comes in I will only have 1 child in education however I am not willing to put her in child care to work whatever hours the government requires looking at other threads. We live in such a rural area it would be virtually impossible anyway.
I nearly didn't post as I notice on here you always get someone accusing you of trying to defraud the government/ taxpayer in the first few replies.
I just wanted to make sure that if OH lost his job we would be able to pay the rent until he found work and not put us in an impossible situation with no income, no benefits and a flat to small to live in.

wouldbeqaulitymoneysaver

You sound like a nosy parker poking your nose where it is not wanted.
No doubt plenty of upstanding self righteous upright wonderful people to support you here but I sincerely hope she is a sleuth and can watch your nosiness in action.

sassysar

Is your post directed at me, I'm not sure I understand it.

BigAunty

I'm happy that people's 'nosiness' or civic-mindedness results in other people being prosecuted for benefit fraud.

Why should someone who owns a property rake in rent from a tenant, not pay tax on their rental income, and then make the taxpayers fund their other accommodation?

Rikki

The MIR (benefit) only pays the interest on the mortgage, you still need to have a payment vehicle in place to pay off the capital at the end of term.

leveller2911

wouldbeqaulitymoneysaver wrote: »

You sound like a nosy parker poking your nose where it is not wanted.
No doubt plenty of upstanding self righteous upright wonderful people to support you here but I sincerely hope she is a sleuth and can watch your nosiness in action.

If the OP has personal knowledge that the woman is commiting fraud then all honest posters should encourage him to contact the authorities.

Why would you not encourage him to be honest? something to hide?.

If she is defrauding the taxpayers then she is stealing money which could be spent on those in genuine need.......Jog on and have a think about it.....

BigAunty

Rikki wrote: »

The MIR (benefit) only pays the interest on the mortgage, you still need to have a payment vehicle in place to pay off the capital at the end of term.

We don't know that the OPs friend has MIR on the property she owns. Chances are, she must realise that if she claims MIR on this one, and HB on another, the benefit systems may detect that she's claiming to be both a property owner and a tenant and expose her fraud.

So if the OPs friend has a repayment mortgage, then the tenant is essentially paying down her mortgage while the taxpayer is giving her free accommodation elsewhere.

Firefox1975

wouldbeqaulitymoneysaver wrote: »

You sound like a nosy parker poking your nose where it is not wanted.
No doubt plenty of upstanding self righteous upright wonderful people to support you here but I sincerely hope she is a sleuth and can watch your nosiness in action.

Failure to report any crime that you are aware of can be construed as aiding and abetting.

tatonette

The facts that have been outlined by the OP could well NOT be fraudalent.

There is the distinct possibility that provided this person has set up things in an efficient manner, she will be entitled to HB as well as owning another property that is let out. You can only pay tax on rental income if there is a profit after all expenses have been charged. There could well be no income from the rental property to be set against any means tested benefit, and it will be unlikely that there could be any equity that can be treated as capital for means tested purposes.

The OP might have info on what 'appears' to be happening, but I would be surprised if she is privy to how the whole thing has been set up legally.

The OP might be even more annoyed if the Council don't do anything and the person is allowed to continue as before.

Never a good idea to poke your nose in someone elses affairs - you will never know the full and true facts!