Dad owns flat, can I get housing benefit?

Alive

Hey,

My dad owns my flat and I pay him the mortgage (£200 p/m). Looks like I'm losing my job. If my dad registers as a landlord, can I get housing benefit? Are there any other potential complications / hoops that need jumped through?

Cheers

BigAunty

Assuming that you don't live in the same property, then yes, housing benefit can be paid to a tenant in a property owned by a landlord who is a close relative as long as it isn't considered a 'contrived tenancy' (one set up to exploit the housing benefit system).

google 'contrived tenancy' to understand what the council expect in terms of it being a formal arrangement.

By the way, there's no such thing as 'registering' as a landlord as such (outside of Scotland anyhow).

HB58

Once he has taken on the role of landlord, your father will have to do all the things that landlords are obliged to do - such as getting an annual gas certificate and declaring the income to HMRC via the self-assessment route (although he would only have to pay tax on any profit,he still has to declare everything properly). It would be worth having a look at the 'house buying, selling and renting' forum of this site to fully understand the obligations of being a landlord.

karenx

Also I doubt he can just charge you £200 rent. It needs to be market value. So look at properties nearby similar and see what they are charging for rent. Then if you are single the housing benefit wont cover the rent in full and you will have to make up the shortfall.

vax2002

if its mortgaged your dad does not own it, the lender does, many wont allow subletting.

Morlock

karenx wrote: »

Then if you are single the housing benefit wont cover the rent in full and you will have to make up the shortfall.

That is not necessarily the case, dependant upon the OP's age and LHA rate, full rent may be covered by housing benefit payments.

BigAunty

karenx wrote: »

Also I doubt he can just charge you £200 rent. It needs to be market value. So look at properties nearby similar and see what they are charging for rent. ...

I know that the council will expect some formality in the tenancy, such as a tenancy agreement rather than a verbal agreement, and therefore a more commercial or business like approach to it, but I've not yet seen any regulations or guidance that explicitly state that it must be rent charged at market rate.

So if you can provide any evidence, this would be appreciated as this 'commercial level rent' is often cited by MSE members on family related tenancies like this and I haven't yet seen anything official on the matter.

Alive

Thanks a lot for your input folks.

The flat would rent for about £380 - 400 so I would hope to get the £200 covered. Guess only time will tell.

fogartyblue.

karenx wrote: »

Also I doubt he can just charge you £200 rent. It needs to be market value. So look at properties nearby similar and see what they are charging for rent. Then if you are single the housing benefit wont cover the rent in full and you will have to make up the shortfall.

What the dad needs to do is find out what the HA is for that property and charge it.

Provided that the tenant is entitled to the property, age, circumstances etc, then the full rent would be paid by the council.

On the other hand if the flat is a 3 bed penthouse there is no way that a 21 year old single girl would be entitled to that size of property and type.

HappyMJ

It will be difficult to up the rent when and only when claiming HB and that may seem contrived to get more HB. I'd leave it at £200 and maybe up it by small amounts regularly. Doubling the rent overnight is not a good idea.

System

fogartyblue. wrote: »

What the dad needs to do is find out what the HA is for that property and charge it.

No he doesn't. It just needs to be a correctly set up and documented tenancy agreement.

See http://www.ownershipoptions.org.uk/pdf/Buying%20to%20let%20to%20a%20relative.pdf

Commerciality
In deciding whether or not the agreement is commercial, the local authority must look at the whole agreement, taking into account all the circumstances. For example, they can look at the agreement to pay rent. As long as there is a binding and legally enforceable agreement that rent has to be paid on a regular basis, a claimant does not need to demonstrate that it is a market rent (in other words, a rent typical of private rents locally).