Housing Benefit: Renting to a Relative.

donaldfleming

If I rented my flat to a niece or nephew, would they be eligible for Housing Benefit in respect of the rent paid to me?

I would not be staying at the flat.

The flat is situated in the area covered by Glasgow City Council

Own_My_Own

Has the flat been rented out before ?

pmlindyloo

All covered here:

http://scotland.shelter.org.uk/get_advice/advice_topics/paying_for_a_home/housing_and_council_tax_benefit/housing_benefit_if_you_rent_from_a_family_member

BigAunty

How old are they? Tenants who are single,without dependents and under the age of 35 may only receive the shared property rate of Local Housing Allowance (HB in the private sector) - they will not be eligible for the rate of a 1 bedroom property, for example, though they can live in any size/any cost property they like so long as they are prepared to pay for the difference between the rent charged and HB received from their other income (employment or benefits).

McKneff

You would be a landlord, and take on all the responsibility of that. ie Gas safe certificates etc. If you have a mortgage on the flat, is it a buy to let.

It would have to be all above board, ie would you evict them if they didnt pay rent, you must treat them as you would any other tenant.

Jinks

I have also been interested in this as my mother is looking to purchase a property and have me rent it from her, and I am on housing benefit. They can do it, but you have to be able to demonstrate a few additional things to make them eligible.

Firstly, you have to show that they have signed a contract like any other tenant who was not related to you which outlines all the usual stuff including the consequences of rent not being paid (i.e. that if they didn't pay they would be evicted, and that being family would not entail being able to live there if they could not pay you).

Secondly, you have to prove that the property has either been let to a tenant previous to them, or that it has been on the market available for other tenants (for example, that it had been advertised as available to rent by a letting agency). This is to demonstrate that you did not let out the property specifically for them to live in it, but rather that you are looking for tenants in general and a relative just happened to be a suitable tenant.

This could mean you'd have to advertise the property and show around anyone who wants to look at it for a few weeks just to tick the boxes, though if you've let it out before it won't be an issue.

BigAunty

Jinks wrote: »

...

Secondly, you have to prove that the property has either been let to a tenant previous to them, or that it has been on the market available for other tenants (for example, that it had been advertised as available to rent by a letting agency). This is to demonstrate that you did not let out the property specifically for them to live in it, but rather that you are looking for tenants in general and a relative just happened to be a suitable tenant.

This could mean you'd have to advertise the property and show around anyone who wants to look at it for a few weeks just to tick the boxes, though if you've let it out before it won't be an issue.

While I've seen repeated claims that in order to fulfill the terms of it not being a contrived tenancy, the landlord has to prove its commercial by showing that its on the open market for rent, I've equally come across advice on the internet that suggests that councils can't actually demand this as a pre-requisite of paying HB. The OP should google the term 'contrived tenancy' to identify some positive advice on how to proceed to ensure it doesn't breach the council rules and how they appeal if the council come up with arbitrary rulings on this.

An example of a contrived tenancy is when, for example, the landlord of the property which has close relatives in it as tenants, they charge rent when the tenant can get HB and nothing when they are in employment.

I do agree that councils want the tenancy to be a proper one but some of the stipulations around the commercial nature of it seem open to dispute and hearsay.

bigbill

They (Nephew / Neice) would not be classed as a close relative.

BigAunty

bigbill wrote: »

They (Nephew / Neice) would not be classed as a close relative.

Good point. I forgot that the formal definition excludes some rather basic family relationships, such as grandparents and uncles/aunts, nephew/nieces. This is the Shelter provided definition of close relatives.

A close relative is a:

• husband or wife
• civil partner
• partner
• parent or stepparent
• father-in-law or mother-in-law
• child or step-child
• son-in-law or daughter-in-law
• brother or sister
• brother-in-law or sister-in-law
• partner of any of the above

susannthe3cs

I get some HB and I rent off my dad.

fluffymovie

This is a tricky area but simply being related to the landlord does not mean no HB.

If the property had been purchased specifically for a relation to live in, this is likely to be found a non-commercial arrangement. The information about Contrived tenancies is where we do not consider there to be a true rental liability (effectively a sham)

The reasons for the creation of the tenancy as it stands would be the issue. For example, if you were unable to stay in the flat yourself, perhaps you have disability needs that it doesn't meet, and wanted to find a tenant you were comfortable with, such as your neice, then this would probably be ok.

It doesn't have to have been let out before but we would use that as a test as to whether you are a true landlord or simply acting to look after family.

We would need to look at the whole picture, rent charged, length of tenancy etc before making a decision so best to speak to HB about what they would need to see before your neice / nephew sign on the dotted line.

What action would you take if rent went unpaid
Do you have a mortgage and is the rent covering that or are you susbidising etc?