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Lodger ESA and SMI

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Hi just looking for some info for my friend.

She is currently getting ESA, Pip, reduced council tax and SMI. The mortgage company are not playing ball and wanting the full amount paid each month and not being very co-operative at all.

If she took in a lodger to try and pay the remaining amount on her mortgage what would she loose. She is WRAG and get low level care pip no other income or savings and lives alone currently.
Play nice :eek: Just because I am paranoid doesn't mean they are not out to get me.:j
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  • pmlindyloo
    pmlindyloo Posts: 13,052 Forumite
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    Hi just looking for some info for my friend.

    She is currently getting ESA, Pip, reduced council tax and SMI. The mortgage company are not playing ball and wanting the full amount paid each month and not being very co-operative at all.

    If she took in a lodger to try and pay the remaining amount on her mortgage what would she loose. She is WRAG and get low level care pip no other income or savings and lives alone currently.

    Please check her benefits as there is no such thing as low level PIP. It is either DLA - low rate care or PIP - standard daily living. This does make a difference as she may be entitled to some disability premiums if she is on the right 'package'.

    To answer the question about taking in a lodger.

    First of all she will need to check whether her mortgage lender will allow this - most do, a few don't.

    As regards how it will affect her income based ESA then she will be better off if she takes in a boarder rather than a lodger. The difference is subtle. You have to provide a meal for a boarder. The simplest way is breakfast - having the food available for your boarder.

    If she takes in a boarder then they will deduct £20 from what she charges her boarder and then 50% of the excess over the £20 and use that to reduce her ESA (counting it as income)

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/470889/dmgch51.pdf

    scroll down to 51105

    I do not know her disabilities but if she is able, she could do some Permitted work (google for more information) which would not affect her ESA (and therefore not affect her housing costs/council tax).

    Or she could do both to increase her income.

    Of course, without knowing her circumstances and how much the repayment mortgage is then both or either scenarios may not be enough to help her financially.

    She may need to seek advice about her whole situation as regards the house.
  • borkid
    borkid Posts: 2,478 Forumite
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    My daughter takes in a lodger ( well she calls him that but maybe he's classed as a boarder) this is the second one. Before she took the first she spoke to someone at the DWP to check how it would affect her ESA. They did send someone around to interview her and the lodger, I think checking he wasn't a partner. I think for what she charges it doesn't affect her ESA but there was someother legislation she mentioned something about offsetting her buildings insurance against the rent. If I find the link I'll post it but it was about 5 years ago now.

    I suggest she speaks to someone first. Also has she a lodger in mind ie a friend, if not how would she cope with a stranger in the house?
  • TELLIT01
    TELLIT01 Posts: 16,606 Forumite
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    I presume taking in a lodger would mean losing the Council Tax Reduction for single occupant too.
  • borkid
    borkid Posts: 2,478 Forumite
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    TELLIT01 wrote: »
    I presume taking in a lodger would mean losing the Council Tax Reduction for single occupant too.
    I'm not sure what happened there but she did inform the council. As she's on ESA income related she doesn't pay full council tax anyway.
  • Confuseddot
    Confuseddot Posts: 1,755 Forumite
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    pmlindyloo wrote: »
    Please check her benefits as there is no such thing as low level PIP. It is either DLA - low rate care or PIP - standard daily living. This does make a difference as she may be entitled to some disability premiums if she is on the right 'package'.

    To answer the question about taking in a lodger.

    First of all she will need to check whether her mortgage lender will allow this - most do, a few don't.

    As regards how it will affect her income based ESA then she will be better off if she takes in a boarder rather than a lodger. The difference is subtle. You have to provide a meal for a boarder. The simplest way is breakfast - having the food available for your boarder.

    If she takes in a boarder then they will deduct £20 from what she charges her boarder and then 50% of the excess over the £20 and use that to reduce her ESA (counting it as income)

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/470889/dmgch51.pdf

    scroll down to 51105

    I do not know her disabilities but if she is able, she could do some Permitted work (google for more information) which would not affect her ESA (and therefore not affect her housing costs/council tax).

    Or she could do both to increase her income.

    Of course, without knowing her circumstances and how much the repayment mortgage is then both or either scenarios may not be enough to help her financially.

    She may need to seek advice about her whole situation as regards the house.

    Thanks its standard rate pip she gets.

    Will the lodger/boarder effect the SMI ?

    The shortfall is about 300/400 a month not sure as you get 13 payments of SMI which confuses matter she going to check the paper work.

    She been to CAB who weren't helpful but i suggested she go as sometimes it just depends on who you see. She hoping to get back to work at some point in the future so this is hopefully just a temporary measure.
    Play nice :eek: Just because I am paranoid doesn't mean they are not out to get me.:j
  • Confuseddot
    Confuseddot Posts: 1,755 Forumite
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    borkid wrote: »
    My daughter takes in a lodger ( well she calls him that but maybe he's classed as a boarder) this is the second one. Before she took the first she spoke to someone at the DWP to check how it would affect her ESA. They did send someone around to interview her and the lodger, I think checking he wasn't a partner. I think for what she charges it doesn't affect her ESA but there was someother legislation she mentioned something about offsetting her buildings insurance against the rent. If I find the link I'll post it but it was about 5 years ago now.

    I suggest she speaks to someone first. Also has she a lodger in mind ie a friend, if not how would she cope with a stranger in the house?

    I think its a friend of a friend who is the potential lodger and its a case of taking them in or losing the house, she got letter from solicitor re the house so its dire straits. She has been ignoring previous mails.
    Play nice :eek: Just because I am paranoid doesn't mean they are not out to get me.:j
  • nannytone_2
    nannytone_2 Posts: 12,952 Forumite
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    she could charge minimal rent ( so as not to impact on her benefits) and then split all utilities instead.
    that would free her ESA/PIP money up to pay towards the mortgage
  • missbiggles1
    missbiggles1 Posts: 17,481 Forumite
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    nannytone wrote: »
    she could charge minimal rent ( so as not to impact on her benefits) and then split all utilities instead.
    that would free her ESA/PIP money up to pay towards the mortgage

    I think they'd be more likely to consider him/her to be a partner if she did this!

    Anyway, why should the lodger live rent free rather than cutting back her benefits claim - s/he'd be splitting bils with them anyway.
  • nannytone_2
    nannytone_2 Posts: 12,952 Forumite
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    its a big difference between charging for the bills in with the rent and just splitting bills as they come in.

    many people that house share pay bills jointly in this way.

    the whole point of getting a lodger is to enable the OP's friend to pay her mortgage ...
    if she is going to be no better off financially by having a house mate, she might as well stay as she is
    she isn't considering it because she wants company or to have extra money in her pocket .... but to keep the roof over her head.
  • NYM
    NYM Posts: 4,066 Forumite
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    What about the Rent a Room scheme?
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