Renting from my brother - HB scaring me

tabbylady

Hi all,

I work fulltime but earn a lowish income. I was receiving housing benefit for me and my 2 children, and kept being 'evicted' (3 times in 2.5 years) by landlords/ladies who wanted to sell up. My brother decided to buy a house which he would be able to rent to me at an equivalent to what the rent I was already paying.

I asked the HB people if this was possible, and they said yes, as long as your brother doesn't live at the same address. Well, he doesn't - he lives with his own wife and children in a different area.

However, we had to move out of our rented house in Mid May, and the house he was buying was only available to move into near the end of June, so we had a period of about 5-6 weeks where we were kind of homeless. We stayed with friends for about a week, but this was a huge strain, so my brother paid for us to stay at a hotel for 3 weeks and a B&B for almost 2 weeks. We are obviously v. lucky to have him so supportive.

I went to see the HB people in Mid May to say we were going to have a period where we would be in an unfixed address, and I would let them know as soon as we were in a fixed address again. They said fine, and suspended our payments. I went to see them again to reinstate the claim about 2 weeks after moving into this house (busy with work) and to give them the tenancy agreement (between me and bro).

I received a letter today asking for the following which really worries me:

• They want to know where I stayed between the prev. address and this one (hotel and B&B)
• They want to know how I paid for it (my brother did)
• Bank account statements
• Proof of the rent I pay and deposit paid to my brother (I haven't paid a deposit yet as haven't had the money, although the tenancy agreement says £1200 deposit)
• Whether my brother specifically bought the house for me to live in (he did, although with the proviso he would get something back - even though it would not be market related rent)
• What action he would take if I failed to meet the liability? (At a guess, it would put a huge strain on our relationship as he hasn't got unlimited funds, and he might need to sell the property)
• What other properties I considered before agreeing to rent the house from my brother (none really).

Is the situation hopeless? They didn't indicate that there would be any kind of problem as long as we didn't live at the same address. The rent that I have to pay my brother is about £600 below market value per month.

Also, I haven't actually paid any yet, as I haven't had the money, and my brother is happy to wait until I start getting benefit.

This is really hugely weighing on me. I am already having to see a counselor for depression, and although I hate laying a sob story on people I just really can't face sarcastic or mean replies (even via the anonymity of the net), so please be kind. I would really appreciate it if someone tells me what they think will happen.

BTW, I have been really honest and upfront with all the info given to HB people. I am so scared that they will say, 'you've got a rich brother and he will have to provide for you'. I would rather move out of the house than strain our relationship.

real1314

ok, the main issue in this sort of situation is that you have to show that the tenancy has been set up on a commercial basis.

You say the rent is £600 below the market rent per month? that sounds like a lot?

They've asked what he'd do if you couldn;t pay the rent (e.g if HB was refused), so what would he do? I'd suspect he'd have to sell it? You virtually said as much. That would satisfy that aspect.

They've asked if he bought it for you to live in - well it sounds like he bought it to rent out and that renting it to you was a way of reducing the risk for him as he knew you'd take care of the place, equally for you it meant you'd get somewhere decent to live.



This sort of thing is really just a procedure they have to go through to establish that the liability to pay rent exists.

Ross01

You can rent from a close relation but you still need to establish that it is a genuine commercial agreement.

The local authority clearly have legitimate concerns over non commerciallity. There are lots of facts in your case which imply that the agreement is not commercial - ie that this is not a genuine tenancy agreement and if you didnt pay your rent your brother would not evict you.

The evidence could be read to suggest that your brother would not be interested in renting out the property to anyone else. If you didnt pay the rent he would not evict you and get another tenant in.

The are going to be major concerns raised about the fact that you havent paid a deposit. If it was a genuine commercial agreement a landlord would demand a deposit before the tenancy was signed.

But more worring is the fact that your brother has previously been financially supporting you, while waiting for the property to be available. Again it sounds like this is not a commercial agreement. As what landlord would pay for a hotel for their tenant, if the property was not available in time?

Your actions in waiting around (staying with friends, staying in a hotel) could also suggest it is not commerical - that you were not interested in renting any other property appart from your brothers, and have put yourself out.

Add on the fact that your brother has no history of renting properties, did not show the property to any other tenants, specially bought the property for you, and is charging below a market rent and there are going to be major questions raised about the commericality of the agreement, and I would not like to comment on whether the LA agree to pay benefit.

Anyone of these points in themselves is not enough to proove non commerciality but add them together and you could be in for problems. It is close to the line and you may be refused.

The best bet is to get your brother to proove that he has a mortgage to pay on the property, and to say that if it is not met by you paying rent he will have no option to evict you. As that will tend to suggest it is a commercial agreement.

Morglin

SHELTER are very good in giving advice on this situation:

http://england.shelter.org.uk/advice/advice-7386.cfm

Lin

Chrysalis

As I understood commercial agreement meant that the relation is not living with you, the rent paid is what would otherwise be paid if another tenant is in, a proper tenancy agreement.

what I think they been harsh on is.

the fact you havent paid the deposit.
the fact he supported you in the interim.
the fact you probably wouldnt be evicted if you couldnt pay your rent.

end of the day you have made a legitimate claim, you are saving them money because if your brother didnt do this you would likely have to pay higher rent elsewhere. They probably asking about the deposit and how you managed to pay for your interim housing needs to find out you not paying from some savings that are stashed away since housing benefit is means tested, if they asking because they think your brother shouldnt be helping you then I find that a bit stupid, I know if you was renting of a unrelated landlord you typically dont get asked how you afforded the deposit and how did you pay for previous properties.

I suggest you ask someone like cls direct for legal advice.

tabbylady

Thanks for your comments. I am just going to write down the answers to all their questions as truthfully as I can and just hope for the best.

The whole reason that my brother has done this is certainly not to benefit himself - it's because he wants me and my kids to have a stable roof over our heads; one where we don't have to worry about being asked to leave, and where we can put pictures on the walls etc etc.

It is far better accomm than we had in our other tenancies, mainly because he wanted to make sure that it was a house we could comfortably live in until my kids (4 and 5 at present) can live in until they leave school.

My brother does actually have a history of being a landlord; he has been renting out a flat in london for a couple of years since he moved in with his (now) wife. Does this help at all?

I did ask about whether this arrangement was ok with the HB before he even looked for a place, so it's just worrying that they're asking so many more things, and it feels a bit like a minefield - whether I give the wrong answer or something.

I thought the same thing - that we were saving the council money. Hopefully they will see this too. The main thing I'm worried about is that they might say my brother has an obligation to continue looking after us. Is that possible?

Thanks again

diddlydum

The big danger is that the council will decide this is a contrived tenancy, i.e. if there wasn't housing benefit at stake the tenancy would never have been created. That's a bar to receiving housing benefit, as you have to show that the agreement is genuine and commercial, and that housing benefit would prevent you from being homeless.

I have a horrible feeling that the local authority will deem this to be a contrived tenancy, and you will not receive housing benefit. The fact that he acts as a landlord for other properties will definitely count in your favour, but ther subsidy and the peppercorn rent won't. I don't think that you can realistically show that the tenancy is genuine, but don't forget that any decision can be challenged.

real1314

OP - you might want to have a look at a book by Zebedee, Ward & Lister ([previously just by Zebedee & Ward) called the Guide to Hsg Benefit nd Council Tax Benefit -it's re-published every year with updates.

Just looked in the 2003-04 edition, paragraph 3.40 refers to a case where an authority tried to refuse HB, but the fact that the landlord would re-posses to let to another or sell swayed the decision.
3.41 comments that an arrangement by persons who would be eligible for HB anyway, to be provided with accomodation by a parent or realtive was not to be viewed in itself as an arrangement to to take advantage of the HB scheme.

Should be a copy in your local library. WH Smith stock it but it's over £20 a copy. When you get hold of a copy look up "contrived" and "commercial"

Mics_chick

tabbylady wrote: »

Thanks for your comments. I am just going to write down the answers to all their questions as truthfully as I can and just hope for the best.

The whole reason that my brother has done this is certainly not to benefit himself - it's because he wants me and my kids to have a stable roof over our heads; one where we don't have to worry about being asked to leave, and where we can put pictures on the walls etc etc.

It is far better accomm than we had in our other tenancies, mainly because he wanted to make sure that it was a house we could comfortably live in until my kids (4 and 5 at present) can live in until they leave school.

My brother does actually have a history of being a landlord; he has been renting out a flat in london for a couple of years since he moved in with his (now) wife. Does this help at all?

I did ask about whether this arrangement was ok with the HB before he even looked for a place, so it's just worrying that they're asking so many more things, and it feels a bit like a minefield - whether I give the wrong answer or something.

I thought the same thing - that we were saving the council money. Hopefully they will see this too. The main thing I'm worried about is that they might say my brother has an obligation to continue looking after us. Is that possible?

Thanks again

Have you shown the letter to your brother Tabbylady?

Please look at all the information suggested to you or show this thread to your brother

I'm not suggesting that you lie or collude or anything like that - I just think you sound a bit overwhelmed by all of this and if your brother has done well for himself (ie a businessman ???) then he might be able to make more sense of everything...

Basically it sounds to me as long as your brother says he will evict you and sell/relet the house if you can't/don't pay then it should be alright...but I'm no expert

If your brother has supported you over the last few weeks then say that everything he has paid out is a loan and he expects you to pay it back as soon as you've settled in - they can't prove otherwise

tabbylady

Hi all,

I'm putting the letter together, answering all their questions. This one really bothers me though - do I put that my brother is taking a loss on the mortgage or not? does that help or hinder things? I would hate for them to construe that the 'loss' is 'additional income' for us. We have just settled into this house and have felt so lucky and happy that to have to move out would be so bl**dy awful I can't describe it.

Anyway, here it is...

8) Please confirm if your brother purchased the property for you to move into:
My brother did purchase the house with the intent of me living there, but this was planned a while ago, as my landlord gave me notice in March that he needed me to move out of his house which really distressed me. I also had to move out of another tenancy the previous year due to the landlady needing to sell her property.

In early March I phoned the Housing Benefit office to check that I would be allowed to rent a house from my brother, and was told that it would be fine as long as it was a proper tenancy, and that he did not live with me. As both of these conditions were met he went ahead with finding and buying the house. My brother did this as a long-term investment and to try to prevent me and the children from being 'evicted' again. I think he is actually taking a loss on the monthly mortgage by letting to me.

Mics_chick

tabbylady wrote: »

Hi all,

I'm putting the letter together, answering all their questions. This one really bothers me though - do I put that my brother is taking a loss on the mortgage or not? does that help or hinder things? I would hate for them to construe that the 'loss' is 'additional income' for us. We have just settled into this house and have felt so lucky and happy that to have to move out would be so bl**dy awful I can't describe it.

Anyway, here it is...

8) Please confirm if your brother purchased the property for you to move into:
My brother did purchase the house with the intent of me living there, but this was planned a while ago, as my landlord gave me notice in March that he needed me to move out of his house which really distressed me. I also had to move out of another tenancy the previous year due to the landlady needing to sell her property.

In early March I phoned the Housing Benefit office to check that I would be allowed to rent a house from my brother, and was told that it would be fine as long as it was a proper tenancy, and that he did not live with me. As both of these conditions were met he went ahead with finding and buying the house. My brother did this as a long-term investment and to try to prevent me and the children from being 'evicted' again. I think he is actually taking a loss on the monthly mortgage by letting to me.

Please Please PLEASE don't put that last bit in - if they don't ask for any information specifically then don't volunteer it :eek: :eek: :eek:

I would also remove the bit about "to try to prevent me and the children from being 'evicted' again" because you can't make them think he WON'T evict you if you don't pay the rent... as per the advice given in earlier posts about a commercial tenancy