I don't know the first thing about housing benefit. Please help.

Anchoress

She could always get a flatmate to help with the rent even though it's only a one bedroom place. Plenty of people do sleep on a sofa bed and from the sounds of it she'd have no trouble getting someone to share if it's a decent place.

Morglin

Some info, from Shelter, on renting to a relative:

http://england.shelter.org.uk/get_advice/housing_benefit_and_local_housing_allowance/what_is_housing_benefit/housing_benefit_if_renting_from_a_family_member

Lin

debrag

GolfGirl wrote: »

Yes, I've heard of contrived tenancies but this is surely the opposite? We're deliberately charging her way under the market rate.

Anchoress, I don't think the issue is that we want our daughter to live "more upmarket" at the expense of the taxpayer. It's a small one-bed flat in a very ordinary block (some of which are actually rented privately by the council for single people), not a luxury penthouse.

Yes, we could do as you say (we've already thought of it) with regard to giving our daughter £150/month but we can't really afford it. Perhaps it's immoral of me even to think of my daughter applying for housing benefit so we could both benefit a little. I have to admit that I've struggled slightly with the whole concept. But you say that's not what housing benefit is for - what is it for exactly? Surely it's for people who work hard, with long hours, but who find it very difficult to afford the rent on a small, basic, habitable home.

But you can afford to pay a top up the mortgage?

northerntwo1

GolfGirl wrote: »

It never crossed our minds that she would get £400/month HB! :-0

She has filled in an estimate form and it does indicate she is eligible.

Funny about the contrived tenancy thing. We actually thought we were being honest and decent by charging her half rent and being up front about it!

If she got some HB, she could pay us a little more rent. But I do see I've got things a little topsy-turvy here. I know nothing of the ins and outs of this sort of thing. I've never had anything to do with benefits except Child Benefit. It's all a bit of a foreign language.

Thanks for your advice, pmlindyloo.

Isn't that exactly what a contrived tenancy is?

I will charge my child £400 if no HB or £500 if they get £100 HB. Ie charging more to get benefits.

Caz3121

Many people who are single, under 35 and working qualify for very little, if any help as the rent calculation is based on the shared accom rate and the benefit is reduced by the excess income. To qualify she must be on a very low income or you live in an area with a high LHA.
Many landlords mortgages and/or insurance policies preclude renting to those in receipt of housing benefit.
What rental figure did the mortgage company use for the calculations, the norm would be for the rent to cover 125% of the mortgage payment, it sounds like you are short of that

rogerblack

To clarify some - it's a contrived tenancy not because of the reduced rates - but that the reduced rates are a very strong indication that you wouldn't throw her out if she stopped paying.
If she's not going to get thrown out if she stops paying, she has no need of HB.

BigAunty

Horseunderwater wrote: »

The problem that you will both faced is that it will be seen as a contrived tenancy. a) because it is a lower rent than flats of a similar size
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I dispute that as a definition for a contrived tenancy. It is supposed to be a commercial arrangement to avoid being seen as contrived (which many people interpret as a mandatory requirement to charge market rent) when in fact I believe this to mean that it should be on a formal footing, having a tenancy in place.

If the OP googles the term, they will uncover further specific guidance by benefit advice/housing charities charities and also guidance issued to the DWP to clarify the topic which do not emphasise the requirement for rent to be charged at local market rates.

The application will be assessed on a case by case basis - there's not much of a great definition of what is/isn't specifically contrived tenancy behaviour or what constitutes a 'commercial' tenancy.

The only example published that is clearly seen as a contrived tenancy (cited on the Shelter website) is when a landlord doesn't charge rent when the tenant is working but does charge rent when they are on benefits. That is obviously a huge flag that the tenant/landlord is trying to take advantage of the HB system.

GolfGirl

Well, we certainly aren't charging her a low rent in order to fiddle the housing department but because that's all she can afford. As my thread title suggests, I know nothing about housing benefit and wondered if she might be eligible for a little help in order that she might be able to top up the rent she pays to us. If that's a contrived tenancy, then mea culpa. Housing benefit or no, her rent will still be £400 because, although it's not easy for us to find the difference, we'll do it to help her. And obviously we have the property as an investment.

Caz, as I explained in my OP, the flat is owned outright by us. There is no mortgage on it, buy-to-let or otherwise.

I know a little more now, and thank you for your expert advice. :-)

Anchoress

GolfGirl wrote: »

I'll try to be concise.

My husband and I recently bought a second property – a one-bedroom flat – because we had a pension lump sum to invest. We paid 50% cash; 50% mortgage from equity in our own home.
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Because of the low rent we are charging her, it's costing us around £250/month, in addition to the rent she pays us, to cover the mortgage and the service charge.

Eh? You say in your last post that you own it outright and have no mortgage on it???

Edit: Oh OK. The mortgage is against your first home, my bad.

thorsoak

GolfGirl wrote: »

I'll try to be concise.

My husband and I recently bought a second property – a one-bedroom flat – because we had a pension lump sum to invest. We paid 50% cash; 50% mortgage from equity in our own home.

Although we could rent it to tenants at £800–900 per month, instead we are letting our daughter live in it, paying us rent of £400/month. This is because she cannot afford to live in anything but a horrible studio in the area where she works. It's hopefully not a long-term arrangement – just for a year or two until her salary increases, at which point she'll move out or start paying us the going rate. (That's the plan anyway!)

Because of the low rent we are charging her, it's costing us around £250/month, in addition to the rent she pays us, to cover the mortgage and the service charge.

I think that, in financial terms, she may well be eligible for housing benefit. But will it be a problem that she is renting from her parents rather than a private landlord?

Before she moved in last week, she had been living in a horrible, run-down studio, and at my suggestion she filled in a form for housing benefit. She's had no reply as yet.

Does she need to reapply now she's moved into our flat? (It's in the same council area.)

Some of the questions on the form seemed a bit odd.

"Could you afford the rent when you first moved in?"

"Could your family afford the rent when you first moved in?"

I've drawn up a letter confirming that we are her landlords and the price we are charging her, though of course there is no formal tenancy agreement. Will this be adequate?

If anyone with knowledge in this area could help, I'd be very grateful.

Please look at your post - from the point of a taxpayer. Would you feel angry if you were reading it for the first time?

This is a contrived tenancy!