Privately rent while receiving housing benefit.

ichidan

Just curious whether this is feasible.

Suppose I have a friend that is on Housing benefit, so as a result she cannot rent a nice property in a nice area, despite the Housing allowance covering the rental requirement (As you know most landlords don't accept DSS tenants)

So I was thinking:

1. I could allow her to rent part of my property. (thus I receive the housing benefit payments).

2. I could privately rent a nice property in a nice area, which she would live in.

Just wondering what issues may arise from this and whether it is legal?

As far as I understand landlords don't like tenants on DSS(Housing benefit) as they have a tendency to damage the place and/or are unable to pay for damages that exceed their deposit. In this case I would liable for any damages, so this wouldn't be an issue.

I would imagine there would also be a loss for me due to income tax.

But are there any legal issues?

Alternatively, I understand that those on Housing benefit can receive funds directly to their bank account, and thus how would a landlord know that one is of 'housing benefit' class.

sandsni

On a completely practical note: If, for some reason, there was a break or delay in your friend's HB, would you have the funds to keep paying the rent on the 2nd place as well as keep your own bills paid? You would be liable for the rent for the entire tenancy regardless of your "arrangement" with your friend or your own financial commitments.


Just for the record, many mortgage lenders and LL insurers stipulate the "no benefits" thing, so it's not always because the LL thinks someone on HB will be a bad tenant.

Gigervamp

So, the housing benefit she would receive would be for a property she's not actually living in? I don't think that would work. I think if housing benefit found out, she'd be in trouble.

Also, the flat that you rent might have a clause saying that you can't sublet, which is what you would in effect be doing.

Pixie5740

What does your friend renting part of your property mean? Except she wouldn't be a lodger but a subtenant in a completely different property. That sounds like hb fraud and your tenant will most likely prohibit subletting.

I have no idea how a ll would find out if a t was claiming hb particularly if the hb was paid to the t.

[Deleted User]

Housing benefit do do data searches and bills/benefits she has registered to the other address could cause problems. As legally, she has to register to vote at the address she is living at.., finding out she isn't living at the address she is receiving HB for, would not be difficult. She'd have to pay bills at the 'other' address. another problem. It could look like she was receiving housing benefit for one property and living at another (oops, she is), then she'd have to prove she didn't have another income or own the house she is living at. The LL would get to know.., she'd be evicted.., blah blah. And even more importantly, its called fraud i.e. claiming HB for a property she isn't living at. So she gets done.

I don't see how you could rent 'part' of your property (i.e. this would probably count as a room/lodger agreement which has a different LHA rate) for enough rent to cover her rental of a whole property. And what happens if someone from Housing or benefits generally comes round to talk to her? It does happen. And I'm not sure if both of you couldn't be done for fraud (you would be her LL as far as housing is concerned and receive rent for something that isn't happening at your property). So you could get prosecuted.

In answer to your question - how would a LL know she's paying rent through HB.., LL's will normally ask for a credit check. If she doesn't have a job to give a reference (showing she has x income), as a part of that check, questions will be asked as to how she is going to pay rent. HB would have to be mentioned. So still quite difficult to rent. So I assume you are going to be the tenant.., officially? You are aware that LL's tend to like to inspect their properties, some do it without notice (shouldn't but it does happen). How will your friend explain she's there but the LL doesn't know her?

To be honest, neither of you seem to have a clue lol. I also think you need to check LHA/HB rates for your area and double check how many bedrooms she'd be allowed to have under this scheme. They are set to pay rent on the bottom 30% of the private rental sector in any area. These generally are not 'nice' properties in 'nice' areas. I haven't found a single equivalent property in my area (its cheap).., and yet I still have to top up the HB I receive (its been frozen for two years, rents have gone up)! And its paid every four weeks, whereas rent tends to be charged every calendar month. So a top up is needed for that. True, you do get 13 months in a year so it catches up eventually.., but you have to wait for it.

And what happens if for some reason your friend falls foul of the system. And her money stops coming in. It does happen. Will you be able to pay her rent then?

Mortgage_Mark_2

sandsni wrote: »

On a completely practical note: If, for some reason, there was a break or delay in your friend's HB, would you have the funds to keep paying the rent on the 2nd place as well as keep your own bills paid? You would be liable for the rent for the entire tenancy regardless of your "arrangement" with your friend or your own financial commitments.


Just for the record, many mortgage lenders and LL insurers stipulate the "no benefits" thing, so it's not always because the LL thinks someone on HB will be a bad tenant.

Insurers probably but not mortgage lenders....

clueless1807

ichidan wrote: »

Just curious whether this is feasible.

Suppose I have a friend that is on Housing benefit, so as a result she cannot rent a nice property in a nice area, despite the Housing allowance covering the rental requirement (As you know most landlords don't accept DSS tenants)

So I was thinking:

1. I could allow her to rent part of my property. (thus I receive the housing benefit payments).

2. I could privately rent a nice property in a nice area, which she would live in.

Just wondering what issues may arise from this and whether it is legal?

As far as I understand landlords don't like tenants on DSS(Housing benefit) as they have a tendency to damage the place and/or are unable to pay for damages that exceed their deposit. In this case I would liable for any damages, so this wouldn't be an issue.

I would imagine there would also be a loss for me due to income tax.

But are there any legal issues?

Alternatively, I understand that those on Housing benefit can receive funds directly to their bank account, and thus how would a landlord know that one is of 'housing benefit' class.

Not all HB tenants are like this. We get LHA and we are very good tenants. We work but just need a little bit of help at the moment. The oven broke (nothing to do with us), we fixed it, the bath leaked (nothing to do with us) we fixed it, the plastic came through the shingle in the garden (nothing to do with us) we reshingled, my point is that not all tenants are like this (although I am sure there are some whether claiming HB or not). I like a nice home (even if I dont own it) and I want a good reference from my landlord when I move out.

tomtontom

What does your wife think of this arrangement? In answer to your proposals:

1. Your friend would only be entitled to the shared room rate if living with you in your property. The LA would also look at the arrangement to see if it was contrived for benefit purposes - it is quite possible she would be entitled to nothing.

2. Your friend would have no liability for the rent and hence not be entitled to housing benefit.

ichidan

sandsni wrote:

On a completely practical note: If, for some reason, there was a break or delay in your friend's HB, would you have the funds to keep paying the rent on the 2nd place as well as keep your own bills paid? You would be liable for the rent for the entire tenancy regardless of your "arrangement" with your friend or your own financial commitments.

For arguments sakes, let's assume I'm a millionaire.

tomtontom wrote: »

What does your wife think of this arrangement?

For arguments sakes, let's assume I'm single.

tomtontom wrote: »

1. Your friend would only be entitled to the shared room rate if living with you in your property. The LA would also look at the arrangement to see if it was contrived for benefit purposes - it is quite possible she would be entitled to nothing.

That's interesting "shared room rate", I'll have to research that.

In answer to your question - how would a LL know she's paying rent through HB.., LL's will normally ask for a credit check. If she doesn't have a job to give a reference (showing she has x income), as a part of that check, questions will be asked as to how she is going to pay rent. HB would have to be mentioned. So still quite difficult to rent.

How about this scenario: If I were to apply to rent from a landlord, and mention that her and her 2.4 children will also be living there. Then a credit check etc. would only be done on me.

deannatrois wrote:

So I assume you are going to be the tenant.., officially? You are aware that LL's tend to like to inspect their properties, some do it without notice (shouldn't but it does happen). How will your friend explain she's there but the LL doesn't know her?

Me, Her, plus her 2.4 children would be living there. So would come as no surprise to see her there. LL may not see me, but that's because I'm probably out working every time LL comes around.

My house (I'm LL): Renting to Benefits person (all their bills go to my house, registered to vote here as well etc.)

Rent house (someone else is LL): Renting to me. Benefits woman + her 2.4 children are also living there.

deannatrois wrote:

To be honest, neither of you seem to have a clue lol.

I must confess, this isn't my day job and as I have a day job, I'm unfamiliar with the benefits system.

deannatrois wrote:

I also think you need to check LHA/HB rates for your area and double check how many bedrooms she'd be allowed to have under this scheme. They are set to pay rent on the bottom 30% of the private rental sector in any area.

Indeed, I've double checked, and the values haven't changed, still 3 bedrooms at 1300 per month for this part of London. A quick check on zoopla finds 3 bedroom semi-detached houses going for 1300 to 1600 (4 bedroom townhouse). So it's all economically feasible.

While some LLs allow Housing benefit, with a guarantor to cover the shortfall. Which is nice because it means that one on benefits can use additional funding to get a better place and in a better location. Unfortunately, the LLs of nice properties in nice areas don't seem to consider this, no matter how much extra $$$ you throw at them (at least this is how I understand it).

deannatrois wrote:

These generally are not 'nice' properties in 'nice' areas. I haven't found a single equivalent property in my area (its cheap).., and yet I still have to top up the HB I receive (its been frozen for two years, rents have gone up)! And its paid every four weeks, whereas rent tends to be charged every calendar month. So a top up is needed for that. True, you do get 13 months in a year so it catches up eventually.., but you have to wait for it.

As you've stated, LHA is based on rentals for the bottom 30 percentile point. So cheapness of an area is irrelevant. What you need to do is find an area where 70% or more properties are 'good', in which case you'll have enough housing benefit for a 'good' property. Whereas if you live in an area with a larger income distribution e.g. 40% live in nice properties, and 60% in poor properties. Then you're not going to get a very nice property. This is perhaps the case for some inner city areas where there is a large economic gulf.

So in summary:

1. I think there should be nothing stopping me renting another property, while owning a separate property.

2. I think there should be nothing stopping me including others e.g. adult friends plus children. But what kind of checks would be done on the other adult friends plus the children?

3. I think there should be nothing stopping me letting part of my property out to someone on benefits (other than insurance). How about if the children are related to me?

a) Of rental property, LL can talk to her whenever she's home, and can talk to me over the phone, and when I'm back in town.

b) Of my own property, Government officials can arrange to see her at my house once they arrange a date and time.

Now, why do I own a property and rent another property? Because I work away from home. I know plenty of people that do this.

Why does she rent one property, and stay at another? Because she sleeps at the rental property, and lives in the HB property. Is there a law against renting two places?

Personally, I know someone that has all their bills & voting registered at their parents address, while they rent near their workplace. Only issues here are regarding claiming expenses for accommodation away from home. (Which I could claim as well)

I know it sounds like I'm suggesting ways of committing a terrible fraud. But the only fraud I see is a system where the poorest people in society are being socially segregated from the rest by either insurance policies or prejudiced Landlords that won't treat a rent payment from someone on Housing Benefit the same as a rent payment from someone with a job. Surely it makes more sense if you were to refuse a tenant for HB, to refuse a tenant for having a minimum wage job, as the income is less reliable.

Pixie5740

It sounds like you're trying to commit fraud because that's exactly what you are your friend willbe doing.

There's nothing stopping you from owning one property and renting another. However you'll both be credit checked and both named on the tenancy agreement. It will appear as though you are living as one household which could affect any benefits your friend is currently claiming.

Better that your friend find a landlord that accepts housing benefit, if she has to declare it at all that is than attempt this ridiculous plan of yours.

ichidan

Pixie5740 wrote: »

It sounds like you're trying to commit fraud because that's exactly what you are your friend willbe doing.

Ok, well if it's fraud then it's fraud, and thus this idea is illegal.

Pixie5740 wrote: »

There's nothing stopping you from owning one property and renting another. However you'll both be credit checked and both named on the tenancy agreement. It will appear as though you are living as one household which could affect any benefits your friend is currently claiming.

I see, government will know that she is staying somewhere else, so people on HB cannot have two places as residence. Well that's a bummer.

Pixie5740 wrote: »

Better that your friend find a landlord that accepts housing benefit, if she has to declare it at all that is than attempt this ridiculous plan of yours.

Yes, I've read that the main reasons people don't like DSS are:

1. rental shortfalls (although having a guarantor with a good job covers that).

2. coming up with the deposit (although again the guarantor can provide a sufficient deposit).

3. regular payments (again guarantor should be able to cover this)

I think I'll try this more conventional route. I've a feeling that many letting agents won't be open-minded enough to consider someone on HB + a guarantor (even after paying extra deposit/extra monthly rent), but discussing directly with a landlord they may consider if they can see they have more to gain from my offer e.g. extra 100/month in rent.

Failing this, she'll just have to live in a bad area for a few years, until I save up enough for deposit on a buy-to-let property in a good area with good schools etc.