Renting to a family member & housing benefit

aless02

It's possible, you just need to go about it the correct way (with a tenancy agreement, deposit taken, etc) so that it's not a contrived tenancy. And rent needs to be charged at roughly market rate. We rent from our ILs and receive housing benefit. It's all above board and the council were satisfied we were 'proper' tenants as we pay the going rental rate for our area and put a deposit in a normal deposit scheme.

ninab_2

aless02 - were you the first tenant in the property owned by your ILs

xylophone

http://www.thisismoney.co.uk/money/experts/article-2284254/I-want-buy-property-rent-son-Are-legal-issues.html

The issue you’ll come across though is that not all buy-to-let lenders will lend on a property which is to be let out to a family member.


Have you checked?

Housing_Benefit_Officer

RAS wrote: »

If you charge her less than a commercial rent it is a contrived tenancy.

Rubbish - you can charge less than a commercial rent and it isn't contrived.

Housing_Benefit_Officer

tom717 wrote: »

I don't understand this rule. I thought a contrived tenancy meant a tenancy that exists to take advantage of housing benefit, how does charging less do that?

It doesn't the poster doesn't know what he/she is talking about.

Housing_Benefit_Officer

ninab wrote: »

Yes I totally get that, we are not !!!!!!!!!!s always worked and so has she, never claimed a bean! It an unfortunate situation shes in, a situation im not at all happy about.

It will be a genuine tenancy, proper agreement drawn up etc. Sounds like she will have to continue with LA homeless application.

You can rent to a family member. The Local Authority will look a bit more closely at the reasons why you are renting to a family member to ensure tenancy is on a commercial basis and not contrived.

pmlindyloo

As Housing Benefit Officer has said a low rent in itself will not make it a contrived tenancy.

More to the point is the information about 1) Does your Buy to Let mortgage allow you to rent to a family member and 2) before the baby is born your daughter will only receive the shared accommodation rate for local housing allowance (look up the rate on your council website.)

This will mean that your mortgage repayments will not be met by the local housing allowance to begin with. Would your daughter be able to 'top up' the rest of the rent herself from her earnings/other benefits/child support? Or could you afford to fund the remainder of the mortgage repayments?

Once the baby is born then she will be entitled to the 2 bed rate of local housing allowance (again, look this up)

A possible option is to let your daughter move in with you until the baby is born and rent out the house to someone else for a 6 month period.

This may have problems (your tenants may not move out willingly for example) but the plus side would be that the property would have already been let out and the contrived tenancy would be less of an issue.

Of course, we don't know the time scale of when this will all take place.

However, look up the local housing rates and see if this is all financially viable and of course, check your Buy To Let mortgage agreement - this may all be a non starter.

joeyfreak

Hi, I havn't read all of the replies but I had to reply and say I currently live in a house that is owned by my mum and I get full housing benefit to live here.
It can be done, but it is very stressful.
My mum bought the house outright with some compensation she received. The money was intended to be her source of income for the rest of her life.
I am the first tenant to have lived in the house. She used a lettings agent, fully managed, and they set the rental rate.
She said as if I didn't live here she would have to pay their rates anyway.

We had to fill in a contrived tenancy form and hand it in with the application for HB which was immediatly approved by the HB officer.

According the CAB the council are not legally aloud to say it is a contrived tenancy on the basis of renting from a family member, they have to have other proof. CAB talked us through the entire process.

The biggest and best piece of advice is to use a letting agent, as they will ensure your daughter is treated as a tenant should be, and to be totally honest to the council on her claim.

BurnleyBob

joeyfreak wrote: »

Hi, I havn't read all of the replies but I had to reply and say I currently live in a house that is owned by my mum and I get full housing benefit to live here.
It can be done, but it is very stressful.
My mum bought the house outright with some compensation she received. The money was intended to be her source of income for the rest of her life.
I am the first tenant to have lived in the house. She used a lettings agent, fully managed, and they set the rental rate.
She said as if I didn't live here she would have to pay their rates anyway.

We had to fill in a contrived tenancy form and hand it in with the application for HB which was immediatly approved by the HB officer.

According the CAB the council are not legally aloud to say it is a contrived tenancy on the basis of renting from a family member, they have to have other proof. CAB talked us through the entire process.

The biggest and best piece of advice is to use a letting agent, as they will ensure your daughter is treated as a tenant should be, and to be totally honest to the council on her claim.

What was 'very stressful' about completing a contrived tenancy form - or was it another part of the process that frayed the nerves?

joeyfreak

BurnleyBob wrote: »

What was 'very stressful' about completing a contrived tenancy form - or was it another part of the process that frayed the nerves?

We went in a few times to ask for advice about the process and were given lots of different advice.
I was basically told that I had to have moved out of my home (which was paid for by HB and was a secure home but too small) before I could apply for HB for the new house. They refused to look at the paperwork for the new claim before I moved in.

Once I had handed my notice in I attempted to put the claim in early to begin on the day of the new tenancy and was told I should never have handed my notice in and the new tenancy would never be approved as it was obviously contrived as the LL was my mother.

They basically told me I had just made me and my children homeless

This went on in circles, with each officer not having a clue what the actual rules were regarding the contrived tenancy process.

I was very lucky that I got to hand my forms into someone who did know the process and luckily got them immediately passed, but had it have been another, less knowledgeable person, I would probably have needed to appeal. - CAB had already told me that in most cases the application is declined and an appeal is later successful (not sure if thats true, that is simply what I was told)

It was basically a month of wondering if I had just made the biggest mistake and made my family homeless, all because the council didn't train its staff fully