Allowable expenses for housing benefits - lodger income

sourpuss2021

I’m a long term tenant of a private landlord.  I have one lodger.  I also sublet the other two flats in the property which is my registered self employment.  My Housing Benefit is reduced because of this income.  I also get money from family which is disregarded.

1. I’m considering getting a second lodger later in the year by converting the large lounge into a bedroom.   At the moment it has bare floorboards (ie subfloor).  I would like to get a carpet and underlay put down. This would need the joiner to come and nail 6mm plywood down first.   

The room is cold and draughty without a carpet and also noise might disturb the flat below (my subtenants).   The cost of the ply, underlay and carpet for the 20sqm+ room could easily be £1200.  Then I’ll also need to spend money on a double bed, mattress, and chest of drawers.   The room has very thin curtains too and ideally they could do with being replaced.

Would I be able to claim these costs as an expense against the resulting lodger income?

Incidentally there is zero chance of my landlord (the owner) footing the bill.

2.  One of the sublet flats needs remedial work in the bathroom which is poorly insulated (lower ground) and mouldy.   This looks like costing £3k+. According to my contract with the subtenants it is my legal responsibility to keep this room in good repair.   The fact is that the owner also is very reluctant to foot the bill for these works, since the rent he charges me is far below LHA rate (and I have well paid professional tenants in there).  So again it looks like I will need to pay this.

I am quite confident that the council would allow me to claim this one-off expense against my income from this particular sublet, and to have it apportioned over a period of 12 months.

But would they just let me count it against the income from the flat it related to?  Or against the income from the other flat as well, since they both constitute my self employment?

Could I also count this sublet expense against my lodger income, or not because having lodger(/s) is not considered part of my self-employment, since they live in my own flat?

I hope this makes sense to somebody

Jyana

sourpuss2021 said:

I’m a long term tenant of a private landlord.  I have one lodger.  I also sublet the other two flats in the property which is my registered self employment.  My Housing Benefit is reduced because of this income.  I also get money from family which is disregarded.

1. I’m considering getting a second lodger later in the year by converting the large lounge into a bedroom.   At the moment it has bare floorboards (ie subfloor).  I would like to get a carpet and underlay put down. This would need the joiner to come and nail 6mm plywood down first.   

The room is cold and draughty without a carpet and also noise might disturb the flat below (my subtenants).   The cost of the ply, underlay and carpet for the 20sqm+ room could easily be £1200.  Then I’ll also need to spend money on a double bed, mattress, and chest of drawers.   The room has very thin curtains too and ideally they could do with being replaced.

Would I be able to claim these costs as an expense against the resulting lodger income?

Incidentally there is zero chance of my landlord (the owner) footing the bill.

2.  One of the sublet flats needs remedial work in the bathroom which is poorly insulated (lower ground) and mouldy.   This looks like costing £3k+. According to my contract with the subtenants it is my legal responsibility to keep this room in good repair.   The fact is that the owner also is very reluctant to foot the bill for these works, since the rent he charges me is far below LHA rate (and I have well paid professional tenants in there).  So again it looks like I will need to pay this.

I am quite confident that the council would allow me to claim this one-off expense against my income from this particular sublet, and to have it apportioned over a period of 12 months.

But would they just let me count it against the income from the flat it related to?  Or against the income from the other flat as well, since they both constitute my self employment?

Could I also count this sublet expense against my lodger income, or not because having lodger(/s) is not considered part of my self-employment, since they live in my own flat?

I hope this makes sense to somebody

Are these new renovations part of the £16/17k works you did last year on your landlord's property, or are you planning on giving him a further £4.5/5k enrichment here?

As per the advise given in your last thread, I honestly think you'd be better off moving and spending the cash on your own future instead.

Rubyroobs

Surely people can't still claim housing benefit with this amount of sub tenants?

sourpuss2021

Jyana said:

sourpuss2021 said:

I’m a long term tenant of a private landlord.  I have one lodger.  I also sublet the other two flats in the property which is my registered self employment.  My Housing Benefit is reduced because of this income.  I also get money from family which is disregarded.

1. I’m considering getting a second lodger later in the year by converting the large lounge into a bedroom.   At the moment it has bare floorboards (ie subfloor).  I would like to get a carpet and underlay put down. This would need the joiner to come and nail 6mm plywood down first.   

The room is cold and draughty without a carpet and also noise might disturb the flat below (my subtenants).   The cost of the ply, underlay and carpet for the 20sqm+ room could easily be £1200.  Then I’ll also need to spend money on a double bed, mattress, and chest of drawers.   The room has very thin curtains too and ideally they could do with being replaced.

Would I be able to claim these costs as an expense against the resulting lodger income?

Incidentally there is zero chance of my landlord (the owner) footing the bill.

2.  One of the sublet flats needs remedial work in the bathroom which is poorly insulated (lower ground) and mouldy.   This looks like costing £3k+. According to my contract with the subtenants it is my legal responsibility to keep this room in good repair.   The fact is that the owner also is very reluctant to foot the bill for these works, since the rent he charges me is far below LHA rate (and I have well paid professional tenants in there).  So again it looks like I will need to pay this.

I am quite confident that the council would allow me to claim this one-off expense against my income from this particular sublet, and to have it apportioned over a period of 12 months.

But would they just let me count it against the income from the flat it related to?  Or against the income from the other flat as well, since they both constitute my self employment?

Could I also count this sublet expense against my lodger income, or not because having lodger(/s) is not considered part of my self-employment, since they live in my own flat?

I hope this makes sense to somebody

Are these new renovations part of the £16/17k works you did last year on your landlord's property, or are you planning on giving him a further £4.5/5k enrichment here?

As per the advise given in your last thread, I honestly think you'd be better off moving and spending the cash on your own future instead.

It wasn't that much that I spent in 2020-2022 on renovations, it was £10k or less.   And rather than complete madness I think it makes sense over the long term given how cheap the rent is plus the terrible state I'd be in without this property.

By the way for my flat he charges £250 below the LHA and £500 below what he could get for it from new tenants.

For the first sublet flat, the one that needs the bathroom work, he also charges £250 below LHA and £500 below what new tenants would pay.  My subtenants pay me the LHA rate but could easily afford more.  I'd like to raise it later in the year but need to fix the bathroom first.   

For the second sublet flat the landlord charges £100 above LHA and I charge the subtenants the market value.

I do think the landlord has priced me in to staying here and acting as I do.   But that's a good thing!  Given the state of the housing market etc.   As a mid 40s single male who doesn't drive I see no alternative apart from my old bedroom back at my parents.  I'm too old for houseshares or to be someone else's lodger and nobody else is going to rent me a whole flat, let alone three!

Smithers37

There is something hugely wrong with someone receiving housing allowance while simultaneously making money off subletting to others, in the height of cost of rent/ownership.

sourpuss2021

Rubyroobs said:

Surely people can't still claim housing benefit with this amount of sub tenants?

Well, why not?

The subtenants live in two separate self contained flats.   Managing / letting out someone else's property is a valid form of self employment, the council don't have a problem with it.

One lodger lives with me at present.  That lodger will move out at the end of the academic year.  Then if I did convert the lounge and get two lodgers after that, I would still be eligible for a bit of housing benefit (though much reduced) and the property still wouldn't be an HMO.

sourpuss2021

Some good posts though in that old thread, thanks for reminding me of them.  For example!:

https://forums.moneysavingexpert.com/discussion/comment/79503221/#Comment_79503221

sourpuss2021

I did get through my Housing Benefit review okay in the end by the way!  I'd sent them six months of bank statements and a huge wad of emails with my landlord and contracts and bills and a long covering letter explaining the setup here.  I also sent the pages from the HB manuals that voluntary gifts (from parents) should be entirely disregarded.

It took them 4 months to process it but they've not queried anything, they just reduced my HB on account of the lodger.  I'd been overpaid for that period but I knew that was happening and immediately paid it off, rather than over the 16 months they'd have accepted. I also don't receive Council Tax Support any more though I still get the 25% discount as lodger is a student.

sourpuss2021

Honestly though my parents aren't too happy that I'm not doing anything else with my life and are pressuring me to get a job.  But I feel I just need to get things in order here first. 

I feel like giving up my HB claim would be a massive and extremely risky step.  So I need to sort out everything here with regards to repairs and renovations while I don't have any other pressures.

Then when I am doing some kind of work, if I did apply for Universal Credit any income from the one or two lodgers would be entirely disregarded! So actually I  would soon make back what I'd spent on renovations to my landlord's property.

I did get as far as talking on the phone to some (bemused) guy on the UC helpline last week.  It sounds like I'd get a work coach from day one even though I'm in (uneconomically viable) self employment.  That would be at the local job centre in my borough.

I'd be much better off for the first year.  Then much worse off in the second year when the minimum income floor kicks in.  But if I'd found a job by then, I'd still be eligible for some UC even if I managed to earn £1.6k a month.  

So in as much as I see a way forward it's for me to fix up the sublet flat, and fix up my own flat so I can get a second lodger.   Then I could apply for UC and end my HB claim.

sourpuss2021

Smithers37 said:

There is something hugely wrong with someone receiving housing allowance while simultaneously making money off subletting to others, in the height of cost of rent/ownership.

Well, that's your view. 

I'm not making much money though, just the same % a lettings agent would charge any landlord.

Then also factor in that the landlord won't pay for anything he isn't absolutely legally required to, and I have to spend money to keep the properties in good condition and the subtenants happy.  If I'm paying for this bathroom work I won't be making anything at all this year.    

poppy12345

sourpuss2021 said:

Smithers37 said:

There is something hugely wrong with someone receiving housing allowance while simultaneously making money off subletting to others, in the height of cost of rent/ownership.

and I have to spend money to keep the properties in good condition and the subtenants happy. 

It's not your money you're spending though, it's your parents.