How related is relative?

CathA

Reading about renting to relatives, I was wondering how close you have to be for it to be an issue?

There's me, I have a daughter who is married to her husband. Husband has a mum who owns a house and rents it out If his mum rented her house to her son and daughter in law (my daughter) that comes under renting to family. All clear there.

However, if his mum rented it to my other daughter, what does that come under?

Genuinely interested, it's not so that anyone can claim HB or fiddle the taxes, anything like that, I just wanted to know. Thanks all.

G_M

CathA wrote: »

..... I have a daughter who is married to her husband.

Whiew!

That's a relief!

Guest101

CathA wrote: »

Reading about renting to relatives, I was wondering how close you have to be for it to be an issue?

There's me, I have a daughter who is married to her husband. Husband has a mum who owns a house and rents it out If his mum rented her house to her son and daughter in law (my daughter) that comes under renting to family. All clear there.

However, if his mum rented it to my other daughter, what does that come under?

Genuinely interested, it's not so that anyone can claim HB or fiddle the taxes, anything like that, I just wanted to know. Thanks all.

Should be fine

Pixie5740

It becomes an issue when landlord and tenant fall out. How far reaching that is depends on the closeness of the families.

As far as HB goes it just has to be demonstrated that the tenancy isn't contrived. If the property has been let on a commercial basis prior to letting it to someone who may count as a relative it should be easy to demonstrate it's not conteived tenancy.

theartfullodger

As to who is family see..
https://england.shelter.org.uk/get_advice/housing_benefit_and_local_housing_allowance/what_is_housing_benefit/housing_benefit_if_renting_from_a_family_member

Housing benefit: renting from family

Find out if you can claim housing benefit for rent you pay to someone in your family.
Living in the same home

You can't get housing benefit for rent you pay to a close family member you live with. For example, if you're living with your parents and paying towards household costs.
People who count as close family members are your:

• parents or step-parents
• child or step-child
• sisters or brothers
• half-sisters or half-brothers

Partners of these family members also count as close family members.
Living in a separate home

You can get housing benefit if you pay rent on a property owned by a member of your close family, if they don't live with you.
You'll need to show proof of your tenancy, such as a contract, tenancy agreement or evidence of rent payments you make to your family member.

CathA

G_M wrote: »

Whiew!

That's a relief!

You did makes me laugh! I was trying to put it down clearly so everyone knew what I meant. I was rushing to get to work at the same time so perhaps I could have worded it better! Thanks everyone x

Annisele

I think there potentially two issues with letting to family. One is housing benefit, but there can also be mortgage issues.

Most buy-to-let mortgages (not all) have terms prohibiting them from being let to people related to the borrower. A person related to the borrower in that context is:

a person who is:

1. 1. (a) that person's spouse or civil partner;
   1. (b) a person (whether or not of the opposite sex) whose relationship with that person has the characteristics of the relationship between husband and wife; or
   1. (c) that person's parent, brother, sister, child, grandparent or grandchild.

(I'm not sure how to link directly to the FCA's glossary definitions, but you can find it if you start with PERG , click "regulated mortgage contract", and then "related persons").

By that definition, your son-in-law's mother is not "related" to her daughter-in-law's sister. So, I don't see a problem with that either.

CathA

Annisele wrote: »

I think there potentially two issues with letting to family. One is housing benefit, but there can also be mortgage issues.

Most buy-to-let mortgages (not all) have terms prohibiting them from being let to people related to the borrower. A person related to the borrower in that context is:


(I'm not sure how to link directly to the FCA's glossary definitions, but you can find it if you start with PERG , click "regulated mortgage contract", and then "related persons").

By that definition, your son-in-law's mother is not "related" to her daughter-in-law's sister. So, I don't see a problem with that either.

There's no mortgage so no problem there. There shouldn't be any issue with housing benefit as my daughter has 2 jobs and pays full market rent. The house was previously rented to someone else as a normal tenancy with the same rent amount, so it looks like there shouldn't be any issues. Thanks again everyone.

PersianCatLady

CathA wrote: »

There's no mortgage so no problem there. There shouldn't be any issue with housing benefit as my daughter has 2 jobs and pays full market rent. The house was previously rented to someone else as a normal tenancy with the same rent amount, so it looks like there shouldn't be any issues. Thanks again everyone.

So if there was no mortgage and HB isn't issue I don't see what there would have been a problem with.

CathA

PersianCatLady wrote: »

So if there was no mortgage and HB isn't issue I don't see what there would have been a problem with.

As I said, there should be no problem. However, should it ever come about that my daughter loses here job(s), it's nice to know that HB would be able to pay her rent if necessary. Be like a Boy Scout, always prepared!!

PersianCatLady

CathA wrote: »

As I said, there should be no problem. However, should it ever come about that my daughter loses here job(s), it's nice to know that HB would be able to pay her rent if necessary. Be like a Boy Scout, always prepared!!

One thing I would advise you to do is to check out the LHA rate for the size of house you are talking about and see how close it is to the level of rent for the house as that will be the maximum amount that LHA will pay.