Gifting house to children - housing benefits

minerva32

Please help, I've tried to get some clear guidance on this through Council One-Stop and CAB but have received conflicting information.

My mother is 64 years old, owns her own home and is in receipt of Housing Benefit allowance to help with the costs of living and council tax. Several years ago she left work due to medical reasons and has been unable to find work since.
She has recently explained that she would like to gift her house to her children as she would like to see us benefitting from her gift whilst she is still around (the house would likely be sold within a couple of years). The house is circa £100k and so is within the Inheritance tax allowance if that was ever to be considered. Likelihood is that my mum would continue to live in the property for a couple of years until is it sold, she wants to relocate.

According to the Government website specifically about gifting property (I can't link to it) it states that if you want to continue living in your property after giving it away, you’ll need to:

• pay rent to the new owner at the going rate (for similar local rental properties)
• pay your share of the bills
• live there for at least 7 years


My question has two parts:
1. Considering that she is in receipt of housing benefit, is she expected to pay this "going rate" rent? Will housing benefit assist?
2.After the sale of the house, if my mum was to look at a rental property and was unable to find work, would housing benefit cover her rent?

calcotti

I don’t understand. Housing Benefit is to help with paying rent. If your mother owns the house (which she presumably does in order to be able to gift it) she shouldn’t be getting Housing Benefit but you say she is.

A more general response to your underlying query is that if someone has capital and gives it away they will treated as if they still have it when calculating entitlement to means tested benefits. Why should the state (taxpayer) support someone who has voluntarily made it more difficult to support themselves.

The bit you have quoted about paying rent and living there for 7 years are the rules around gifting a property and removing it from inheritance tax liability, not to do with benefits. In respect of inheritance there is in case an additional allowance for passing on property to children - but inheritance tax rules are not what this forum is about.

Ames

I think there are at least three rules that stop what you're proposing.

As Calcotti said, she'll be treated as still having the capital.

It's hard to get housing benefit for a house owned by a close relative.

I think there's also a rule that you can't claim HB for a house you used to own.

There's also the issue of if she needs to go into a care home they'll likely view this as deprivation of capital and treat her as still having the cash.

There would also be implications for other means tested benefits she might be claiming such as JSA/ESA.

If she wants to relocate then can't she sell the house and use the proceeds to buy elsewhere?

Afraid_of_Kittens

1) As an ex owner she won't be able to claim any Housing Benefit to help with the rent.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/236950/hbgm-a3-liability-to-make-payments.pdf

Ex-owners
3.281 Treat a person who is liable to pay rent as not liable to pay rent for HB purposes if they
• once owned the dwelling (as a freeholder or leaseholder) that they now rent, and
• sold the dwelling less than five years before, and
• did not need to sell the dwelling to remain living in it

2) If she tried to rent privately elsewhere she would be refused Housing Benefit as she has deprived herself of capital.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/365782/hbgm-bw1-assessment-of-capital.pdf


Deprivation of capital
W1.700 Treat a claimant as possessing notional capital if they have deprived themselves of the capital
for the purpose of receiving or getting an increase in HB and/or CTB.
HB Reg 49 & 50; CTB Reg 39 & 40

So basically if she gives away her home she won't be able to claim Housing Benefit on any rent you charge and if she moves out and rents privately she will still be treated as if she owned her former home and this will stop her claiming Housing Benefit or any other means tested benefits.

If she goes to the Council to be rehomed she will be prevented from applying for any social housing as she will be treated as if she still owned her former home.

The rules you quote:-

• pay rent to the new owner at the going rate (for similar local rental properties)
• pay your share of the bills
• live there for at least 7 years

Are nothing whatsoever to do with Housing Benefit but are regarding inheritance tax.

PS - Housing Benefit isn't paid to homeowners.

Paparika

I'm confused, why are the council paying her housing benefit if she owns her own home?

Does she own it outright or is there still a mortgage on it?

Pollycat

Housing Benefit being paid in these circumstances doesn't make sense to me either.
The OP needs to clarify.

Mojisola

minerva32 wrote: »

My mother is 64 years old, owns her own home and is in receipt of Housing Benefit

If your mother has claimed HB when she is a home-owner, she will have to pay it all back.

minerva32

HI all,

Thanks for your responses. I believe I may have named the benefit wrongly as Housing Benefit, I was told by my sister that's what it was but judging by your responses that seems wrong. The benefit she receives essentially just covers council tax as she owns her home.
@Afraid of Kittens thanks for the references. Clears things up a lot!

Taking into account what has been said, it sounds as though gifting her home is a bad idea.

TELLIT01

minerva32 wrote: »

Taking into account what has been said, it sounds as though gifting her home is a bad idea.

That's it in a nutshell.

marliepanda

minerva32 wrote: »

HI all,

Thanks for your responses. I believe I may have named the benefit wrongly as Housing Benefit, I was told by my sister that's what it was but judging by your responses that seems wrong. The benefit she receives essentially just covers council tax as she owns her home.
@Afraid of Kittens thanks for the references. Clears things up a lot!

Taking into account what has been said, it sounds as though gifting her home is a bad idea.

She will be claiming council tax reduction from the council, not housing benefit as others have covered.

Its rarely a good idea to give your house away, especially when you already cannot cover your essential bills. She needs the money, not you.

pmlindyloo

It may be sensible to find out exactly what benefits, if any, she is claiming.

Also we may be able to assist in making sure that she is claiming all the benefits she is entitled to.

So what benefits, if any, does she get? ESA? DLA/PIP? Any personal pensions that she is receiving? Any savings?

If you prefer not to share then take her to CAB for a benefit check up.

It sounds as if she may only receiving the single person' discount for council tax. In which case it would be understandable if CAB were rather vague about her gifting the property. She may be able to gift the property if she did not need to claim benefits, now or in the future. The question of deprivation of capital (at the age of 64) as regards needing care home is a somewhat 'grey area'.

However, it is understandable that your mum may want you to receive some inheritance. Many people do.

So, perhaps a discussion about what she will live on if she does put the house in your names and then later moves to arented accommodation as deprivation of capital would certainly arise if she need to claim any benefits other than PIP/AA or single person's discount for council tax.