Taking a lodger and claiming UC and HB

Samjo13

I currently live alone, and have Universal Credit with Housing Benefit top up. I get the single occupant reduction of 25% off my council tax too. The housing officer suggested I rent a room out to a lodger to help with my rent after applying for the discretionary payment last winter as I can't afford to move to a smaller property. Would I actually benefit from this lodgers rent or would I lose it in the benefit top ups I receive? I appreciate any advice.

Spoonie_Turtle

For clarity, UC includes a housing element.  Do you claim just UC?  If you live in certain types of accommodation you may also be claiming HB and the answers will be different (I don't think any of those types of accommodation would allow a lodger, but best to be absolutely clear).

Do you rent privately or in social housing? 

I'm not clear on the answers myself, although I believe income from a lodger is not taken into account for UC, but establishing the facts will help those more knowledgeable to be able to give accurate advice

calcotti

For Universal Credit income from a lodger is ignored.
You will lose the 25% single person discount on your Council Tax bill.
Do you claim Council Tax Reduction to further reduce your Council Tax bill? If so, how this is affected will depend on the rules for your local authority.

As Spoonie has said, if you are actually getting Housing Benefit the answer will be different.

sourpuss2021

As other posters have said, it makes all the difference whether OP is receiving legacy Housing Benefit, or (more likely) Universal Credit with the housing element.

I'm a private tenant receiving Housing Benefit and with a single room that before Covid I would usually rent to a lodger.   But ever since the LHA rates were increased last year so that the one-bed rate now covers my rent, it's very borderline whether it would be worth doing. A lot of the income received would just be taken straight out of my HB and council tax support. 

Lodgers tend to stay for shorter periods too so it meant always being in contact with the HB department whenever someone moved in or out, which was also stressful.  There would also be the expense of furnishing the room to a standard that a lodger would accept.

Also lodgers are less reliable at sending money each month than the council.  And then there's the problems there can be in having them in your house!

Samjo13

Thanks, My housing benefit is included in my universal credit. I live in a 3 bed house and want to rent one of the rooms out. And yes I rent privately, my landlord is fine with a lodger. I get the single person discount on council tax.

calcotti

Samjo13 said:

Thanks, My housing benefit is included in my universal credit. 

So it’s not Housing Benefit which is an different benefit. It is the housing element of UC.

see my previous reply

calcotti said:

For Universal Credit income from a lodger is ignored.
You will lose the 25% single person discount on your Council Tax bill.
Do you claim Council Tax Reduction to further reduce your Council Tax bill? If so, how this is affected will depend on the rules for your local authority.

Samjo13

Thankyou for your help. Would the lodger be able to claim for his rent? He is on PIP? And would I have to report to UC/Council that I have a lodger? Sorry, I'm very new to this. He's presently still with his mum and the situation is tense there.

calcotti

I don’t think you need to tell UC.
You do need to tell Council Tax.
You still haven’t answered the question about whether or not you claim Council Tax Reduction.
Whether or not the lodger can claim help with rent depends on their circumstances. Even if eligible they will need a formal lodger agreement in order to claim.

Samjo13

Sorry, yes I do claim the council tax reduction. Where would I get a lodger agreement from? Would I need a solicitor for that? Thankyou for all your help.

sourpuss2021

You won't need a solicitor for a lodger agreement.    You can find one with Google and edit it to fit your situation.

Definitely worth being clear with the guy about the house rules, particularly around whether he is allowed to bring guests to the property etc.

Samjo13

I know him well, he's a very respectable lad, but I will give him house rules and find a proper agreement.  Thankyou