Housing benefit

Angel63

My daughter is moving abroad, can i claim housing benefit if we moved into her house?

benefitbaby

That depends on a lot of factors...

- do you own the home you live in now?
- does your daughter own her house?
- would you be renting from her as a tenant under a legal tenancy agreement?
- do you have any savings or capital above £6k
- why do you want to move into your daughter's home?
- what would your daughter do if you did not rent it?
- or if you moved in and were not awarded HB?

rogerblack

It's problematic.
You cannot if:
The rent is on a non-commercial basis.
This would be for example if it's too cheap, or if there is no proper rental agreement, with the daughter complying with all the normal duties of a landlord - repairs, ...
And then there is the fact it might be a 'contrived tenancy' - she cannot treat you in any way other than a normal tenant.
This would for example mean evicting you if you got behind on your payments, and not giving 'payment holidays' when you got into trouble.

Dunroamin

Your daughter would also need to declare and pay tax on the rental income she receives.

Angel63

We live in council house that is adapted for disabled.But as my condition has now got worse i can't go out of house much as the road we are on has a lot of speed bumps, these are agony to go over, so i only go out if i really have to.
We have little savings left, £2500.
My daughter would like a legal tenancy agreement. Even if we did't rent it, she would rent it to someone else.
Her house is adapted for disabled as i stayed with her for a few days a month to give my husband a break from looking after me. Her house is so much better adapted than my council house. I would love to live here.

Dunroamin

Angel63 wrote: »

We live in council house that is adapted for disabled.But as my condition has now got worse i can't go out of house much as the road we are on has a lot of speed bumps, these are agony to go over, so i only go out if i really have to.
We have little savings left, £2500.
My daughter would like a legal tenancy agreement. Even if we did't rent it, she would rent it to someone else.
Her house is adapted for disabled as i stayed with her for a few days a month to give my husband a break from looking after me. Her house is so much better adapted than my council house. I would love to live here.

What will you do when/if she returns from abroad?

BigAunty

Yes, it is possible for tenants to receive housing benefit when they live in a property owned by a landlord with whom they are closely related so long as the landlord doesn't live with them and the council do not regard it as a contrived tenancy.

Google 'contrived tenancy' to understand what the council will expect in terms of how it should be run and why they place these claims under greater scrutiny. A contrived tenancy is one that is set up to exploit the housing benefit system.

Where will your daughter live when she returns from overseas? Is she aware that if the property is later sold after a few years of renting it out, she will have to pay capital gains tax on it if it rises in value? Will she be able to afford all the repairs? Will her mortgage company give her permission to rent it out?

paddedjohn

You will be better off in the long run staying put in the council property.

Angel63

Thank you for the replies. I think i will just advise her to sell. i don't think she thought about all this tax lark. She owns the house with a small mortgage. It was left to her by her gran. She hopes to stay in Australia for a very long time.

BigAunty

Do a lot more research in the area rather than make such a big decision made on a few posts by amateurs, writing out the pros and cons. Post in other forums to get wider opinions and more ideas about the negatives and the positives than just on MSE.

The tax she would pay would apply only to around a third of the gain since the property gets rented out, less some expenses and other matters, such as previous owner-occupier residence. The HMRC website explains how to calculate CGT. It can be reduced or set back to zero if the owner moves back in for a few years as I think CGT is based on the 3 previous years residence.

She would have to pay CGT if she was planning to rent it to someone else other than you, anyway, plus perhaps she wants a back-up plan for a return to the UK - once you hop off the property ladder, it can be harder to rejoin it.