Rent from family and on partial housing benefit - considering purchasing share

tberry6686

snowdown wrote: »

I am failing to see the problem in claiming housing benefits I am ENTITLED to combined with the fact that my rent is cheap? I pay tax the same as everyone else and if i'm entitled to something of course i'm going to claim it, who wouldn't?

Try googling "contived tenancy" You may well find you are not entitled to housing benefit and are commiting benefit fraud

snowdown

theartfullodger wrote: »

Sir/Madam:

Forgive me but this sounds so like a setup to exploit HB, at the expense of the taxpayer: Am I incorrect perhaps? Many might suggest you knew/know it.

re.You said you have £6k savings. It might appear to many that there's a lie in there somewhere, between the £6k, the £150k & the 5%.... 5% of £150k is £7.5k. For most of us £1.5k is something we'd notice...

If it was a set up to exploit HB then we wouldn't be paying lower than average rent. We would paying more then market rate in order to claim as much as we could from HB. I am unsure how in anyway it could be seen as a set up to exploit HB and I don't think you have any idea what you're talking about.

I didn't say I had 6k savings not did I say I wanted to get a 150k mortgage.

Will you please reread my posts before incorrectly quoting me. I said I had less then 6k and that the mortgage would be on half of the house ( 75k). 5% of 75k is £3750.

Please stop trying to make something out of nothing and seeing this as some sort of scam when it is nothing of the sort.

[Deleted User]

I am afraid you might find that as you need HB, you would fail the affordability criteria for a mortgage for a 50% share. Most benefits won't count when the bank is calculating what your 'earnings' are.

HB is just not there to enable you to buy a place (and make a profit as prices rise), its there to enable a family to rent somewhere to live because they can't afford to buy. If someone buys a shared ownership house and is on benefits to start with, it may be because they have the cash to buy the percentage they 'own' but if done legally, they'd then be done for 'deprivation of capital' (using the money to buy somewhere to live rather than to live on). Again, not what benefits are for. Most people who live in shared ownership and the rent is paid for out of benefits will have bought the place whilst earning, and suffered a change in circumstances. When this happened to me, it was quite a struggle to pay the service charges and rent even with HB coming in to cover the rent. I did it, but with a lot of sacrifices. The service charges and rent were quite expensive relatively speaking. But that is for official shared ownership schemes.., and you aren't talking about this kind of thing. You are comparing apples with pears.

If you are paying lower than market rent, sorry, it is beginning to look like a contrived tenancy.

Yes I can understand you feel you have paid thousands 'for nothing' but it hasn't really been for nothing. You've had a family home to live in for those years, that's what you paid for.

Sorry, but it is a scam. Its not what HB is for. As you need a low level mortgage, and only a third of the rent is paid with HB and you've managed to save thousands (not normally possible even for the most careful as benefits aren't normally generous enough to include 'saving money'), why not try and increase your earnings so you can buy in the normal way without being financed by tax payers?

snowdown

tberry6686 wrote: »

Try googling "contived tenancy" You may well find you are not entitled to housing benefit and are commiting benefit fraud

Yes I know about such things. However a contrived tenancy would take advantage of the housing benefit system by claiming excessive rent. As our rent is considerably less than other private rentals in the street this is not the case. Were we to have notified HB in the first place that we were renting from family I am confident it wouldn't have been problem due to the low rent. The only way it is an issue is when excessive rent is charged. I do wish we had been upfront with them in the first place but there is little we can do about that now.

snowdown

deannatrois wrote: »

I am afraid you might find that as you need HB, you would fail the affordability criteria for a mortgage for a 50% share. Most benefits won't count when the bank is calculating what your 'earnings' are.

HB is just not there to enable you to buy a place (and make a profit as prices rise), its there to enable a family to rent somewhere to live because they can't afford to buy.

If you are paying lower than market rent, sorry, it is beginning to look like a contrived tenancy.

Yes I can understand you feel you have paid thousands 'for nothing' but it hasn't really been for nothing. You've had a family home to live in for those years, that's what you paid for.

What way is it a contrived tenancy? A contrived tenancy is the opposite when you pay over market rate in order to take advantage of extra housing benefit. My aunt could probably put the rent up and we would be able to claim more from housing benefit but she hasn't done that.

HappyMJ

snowdown wrote: »

Yes I know about such things. However a contrived tenancy would take advantage of the housing benefit system by claiming excessive rent. As our rent is considerably less than other private rentals in the street this is not the case. Were we to have notified HB in the first place that we were renting from family I am confident it wouldn't have been problem due to the low rent. The only way it is an issue is when excessive rent is charged. I do wish we had been upfront with them in the first place but there is little we can do about that now.

It doesn't matter what the rent is. If you're gaining a beneficial interest in the property by paying rent to a family member then you can't claim HB.

SnooksNJ

snowdown wrote: »

We are renting from family and receive housing benefit which covers a third of the rent and we pay the rest. Would it be feasible to purchase a 50% share in the property and claim housing benefit on the rent we would pay to our relative on their share or is this against housing benefit rules? We have a 5% deposit although we could save for longer and come up with more.

The other problem is we have never actually declared to housing benefit that we are renting from family. Although I now know it is allowed at the time we were under the impression it was not and so we didn't tell them. I don't see anyway we can tell them now without it looking bad and possibly getting us into trouble.

I have worked out over the years we have paid around 20k in rent to our relative and we have nothing to show for it which is just depressing.

I'm depressed as well paying for housing benefits with nothing to show for it.

theartfullodger

snowdown wrote: »

..... I work full time which they are a...

Well, given all the posts you've been putting up - 16 I think since 12:17 - you either work very untypical hours (possible) or there's something else not right... or my recollection of "full time" was somewhat different to yours...

Cheers!

marliepanda

Firstly Snowdon you misunderstand what a contrived tenancy is. It has nothing to do with 'charging the most rent possible' it's taking advantage. Would the family member rent cheaply to a random person? No. So it's contrived.

Anyway, considering you're paying the rent (which is apparently 3x what you get in HB AND paying for all the maintenance, why would the family member sell you half (if that was even possible) they've got a pretty cushy thing going, all the perks of being a landlord and none of the pesky responsibilities.

[Deleted User]

Your understanding of 'contrived tenancy' needs to be looked at.

A 'contrived tenancy' is when someone rents a place, and there is no risk of the tenant being evicted as would happen with any other form of tenancy..,and usually occurs when renting from family. It is not a real tenancy. It is contrived. Would your aunt keep the rent low for anyone else (Joe Public)? I think not. she'd be looking at charging the market rate.

It has nothing to do with excessive rent. Nothing at all. HB is paid to prevent someone losing their home. If renting from family, and HB is notified of this, they will check if there is a true risk of eviction if the HB was not paid.

see https://en.wikipedia.org/wiki/Contrived_tenancy