Concerns if buying home - ? benefits.

agnesjr

Hello,
Seeking advice please.
I am IHR'd and receive non means tested ESA and own a small home. I received an inheritance and would like to use it wisely to purchase a home for a close family member to provide home security for them. Ultimately would wish for this person to own the home.
This person is in receipt of income based ESA, HB and PIP.

It would seem this is not a straightforward task. Possible problems for are ?
1 need to become a registered landlord
2 would then be deemed to be running a business and fit for work - which is totally not the case
3 tax implications - even if charging no/minimal rent

Possible problems for relative ????

This is a genuine wish to help my relative. Zero intention to do anything inappropriate.

Thanks in advance

Sheepski

1 - if the person owns the house you won't need to be a landlord would you? Would there be a mortgage on the house or was the inheritance enough to cover the full cost?
2 - highly doubtful unless you were going to be going around and doing maintenance work on the property or spending hours every day in an office doing paperwork etc. For 1 property that a friend/relative lives in, it's not going to constitute being fit for work
3 - any rent will be taxable. Your ESA will be taxable too, so if combined they go above your personal allowance then expect to pay tax. Caveat though, I'm not sure whether the income from renting will be treated the same as employed income, and be added to your personal allowance. You'll be classed as self employed I'd imagine and fill in a self assessment though. Someone more knowledgeable could help further with this.

xylophone

You receive both an occupational ill health pension and ESA (C)?

If you bought a property and received rental payments, these would be regarded as income.

Regardless of whether or not you received rent, you would still be a landlord and be required to comply with the regulations governing landlords.

Had you considered lending the money to your relation to enable him to purchase a suitable property?

You would take a first charge against the property and could make the loan interest free if you wished.

The relative could make modest monthly capital repayments at a rate set by you and in your will you could "forgive" the loan.

You would take qualified legal advice about setting up the private mortgage agreement/your will/IHT implications etc.

calcotti

xylophone wrote: »

Had you considered lending the money to your relation to enable him to purchase a suitable property

Would need to avoid the recipient ever actually having the money as tis would prejudice their income based benefits.

xylophone

Would need to avoid the recipient ever actually having the money as tis would prejudice their income based benefits.

When buying a property, the purchaser does not normally make a direct payment to the vendor - rather the money goes through the purchaser's solicitor for onward transmission.

I should think that the OP would make the payment to her relative's conveyancing solicitor so that he could pay the vendor's solicitor.

Thus the money from the OP would never be in the relative's personal account.

calcotti

xylophone wrote: »

When buying a property, the purchaser does not normally make a direct payment to the vendor - rather the money goes through the purchaser's solicitor for onward transmission.

I should think that the OP would make the payment to her relative's conveyancing solicitor so that he could pay the vendor's solicitor.

Thus the money from the OP would never be in the relative's personal account.

That's what I would imagine but I just wanted to flag it up to OP.

TELLIT01

HB might be affected as I get the impression they won't be paying full market rent.

calcotti

Does the lucky recipient have a Severe Disability Premium included in their ESA and HB?

If they do not and if they are going to be paying rent but want their HB and ESA to continue then the new home needs to be in the same local authority area, otherwise they will be forced to claim UC in order to get help with the rent.

If they do have SDP then it doesn't matter as they are excluded from claiming UC and can stay on legacy benefits (as long as the change takes place before January 2021).

xylophone

That's what I would imagine but I just wanted to flag it up to OP.

Yes, indeed and very wise - the OP/relation would not wish to be involved in convoluted discussions witH DWP if the money went first to the relation so that he could transfer the money to his solicitor to purchase the property (although I'd have thought that a DM would not regard using a gift to buy a home to live in as Deprivation of Capital in order to keep means tested benefits)?

But better to avoid the problem altogether!