How does a lodger affect UC eligibility in private rented accommodation?

sourpuss2021

It’s looking like I’ll finally have to switch over from HB to UC because my private landlord is massively hiking my rent to £1850 which is £500 above the LHA.  It’s a 2-bed London flat in my name. 

65% of the money a lodger pays is treated as income under HB.  That’s been okay when the rent has been cheap.  But after the increase and along with the LHA shortfall it would make it impossible for me to stay here. 

My understanding is that on UC any income from the lodger would be ignored.  So I’d be eligible for maximum UC - about £1400.  And if I turn the lounge into a bedroom and rent it out, rather than the single room, I could get as much as £1075 (including bills) from a lodger.  So together with some help from family I could theoretically still stay here - provided lodgers live here 12 months of the year.

I believe I could also be eligible for PIP and possible be in the low work eligibility group due to disability.  Though really I do need to find a path back to employment - despite a gap of many years on my CV.   I think this would mean the benefits cap might also be lifted.

I just phoned a UC helpline and the advisor spooked me, however.  He said that I would not be able to have the flat in my name, and receive disregarded income from a lodger in the second room.  He said the landlord would have to issue a  joint tenancy, and I would only receive UC for 50% of the flat.   The shared rate is very low, about £525, so nothing like £925 which is half the rent, and bills are about another £165 each on top.

I wouldn’t want to have to speak to the landlord about doing this. He doesn’t know I’m claiming anything. And I wouldn’t want to lose having the flat solely in my name.

Surely the advisor has got this wrong?  I can’t see anything that says you’re not allowed to have a sub-tenant / lodger in a privately rented 2-bed flat on UC, and that instead you must sign a joint tenancy and receive only the shared accommodation rate.

sourpuss2021

The advisor did not ask me if I’m aged over 35 - I am.  

I did have to type in my date of birth before being put through to a human being.

Perhaps that’s the reason for his error?

sourpuss2021

By the way if/when I get a lodger again I will have two rooms that nobody else can use.  A double of about 12sqm, and a box-room of 5.5sqm.  

The lodger will have their own very large bedroom (the room previously known as the lounge).  

We’ll share the kitchen and bathroom.  

sourpuss2021

If I applied for UC now, would it be calculated on my current rent, or on the higher rent that takes effect from 1st November? What I have from the landlord is a Form 4 notice showing the old and new rents.   

If I applied now could I expect to receive UC before the 1st November rent day?  Or not because it’s paid a month in arrears anyway? 

Would I continue to receive HB until I got my first UC payment or would that stop as soon as I put in an application? 

Newcad

Your post is a bit confusing, but as I understand it:

You are wanting to take in a lodger to help pay your rent. You currently claim Housing Benefit from the council.

You are correct that while any income that you get from a lodger would be counted as income for HB it would be disregarded in UC.

However UC Housing Element would not pay any more than your current Housing Benefit, both are capped at your eligible LHA rate so pay exactly the same.

The advice from the UC helpline is wrong (they are poorly trained).
There is no reason at all why you can't be a tenant with a lodger and still claim UC - provided that your Tenancy Agreement allows it.

Indeed that's why the rule about income from a lodger being disregarded in UC exists in the first place.

(Forget the joint tenancy thing, whilst possible it isn't practical and it just shows that the person on the phone knows nothing about the practicalities and laws around of Tenancy Agreements, you can't change them just like that).

Your stumbling block is that you don't want to speak with your landlord, but to take in a lodger then you are going to have to do that.
Even if your TA does allow a lodger it will no doubt say that you need your landlords permission. (and do you not think that your LL would notice that there is now an extra person living there?)

Your other questions about disability benefit lead me to say that you should not be doing anything in haste here but you should get independent advice (not the UC phoneline) about what benefits you could/should be claiming.

Put your postcode in here to find advisors local to you, and make an appointment to get their help: https://advicelocal.uk/find-an-adviser

sourpuss2021

Thanks, Newcad, that is very helpful.

The rent has historically been cheap - this will be the first increase in 5 years.  But I have spent a lot of money on renovations.   Right now the rent is £250 below the LHA.  The 68% increase he is proposing will make it £500 above the LHA.  This is why I feel I’ll have to switch over to UC, because the lodger’s contribution not being treated as income becomes crucially important.

I do think the landlord’s increase is too high and it should be £100 or £150 lower.  I’ve indicated to him that I will challenge it at tribunal.  However given that he lets me have the flat solely in my name, doesn’t ask questions about benefits, and allows me to have a lodger, perhaps I should just suck it up. 

I do have an email from the landlord within the past couple of weeks confirming that I am allowed one lodger.   I have also had lodgers in most previous years.  

However I don’t want to explicitly have to tell the landlord that I am claiming benefits, or the precise amount the lodger is paying.  (Though given the high rental amount he now wants it won’t be above 50% of the cost of the flat including bills, anyway, and the lodger will have by far the biggest and best room).

I also worry that if there are any weeks or months when I don’t have a lodger (mostly likely July through to mid September), my eligibility will fall to the 1-bed rate and I will struggle to meet the rent and pay the bills. 

Ideally a lodger would pay above 50% so I could build up a rainy day fund. But I don’t think that would be possible to get that much for the room.  I should anyway try to save up from what I do have coming in, so I’m not stressing about making the rent all year round.

Thanks for what you say about the UC advisers not being well trained.  Yes he just wanted me to Google it and then we started arguing.   I will look for some independent advice - which in a sense is what I’m doing posting here on this forum .

Yamor

Important to be aware that under UC you won't get the 2-bed LHA rate because of the lodger (unlike in HB).

Newcad

So you do have pernission to have a lodger, and if you emailed your LL about it recently then he knows you may be considering getting (another) one.

One thing we haven't mentioned up to now is Council Tax, if/when you have a lodger living with you then you don't qualify for a single persons CT discount.

It is a big rent increase, ideally your LL should have been increasing it each year rather in a lump, but I know that many LL's / tenants are in the same position.
The LL was doing the tenant a favour by not putting it up each year, but with costs and prices shooting up over the last year they are now ending up out of pocket themselves and so having to make big increases.

How does the new rent compare to what is being advertised locally for renting similar properties?
That is what any rent tribunal will be looking at if you do go down that route. (Of course that would also have implications for your LL/tenant relationship).

Whilst many LLs are traditionally averse to taking new tenants who are on benefits that is changing, it has to change because more than half the tenants in the country will be on UC by the end of next year (All those currently on Working Tax Credits will be migrated to UC).
But as long as the rent is being paid then a LL isn't bothered about where the tenant is getting the money from, wages or benefits as long as it ends up in the LLs account that's what they want..

Whilst we can give help and advice online a local advisor will be able to see any letters, bills, and other paperwork you have so can do a better job. They are also better placed to know local council rules, other local help, and so on.

PS. From what you are saying about July-Sept void periods then it sounds like you are talking about letting to a student?

sheramber

Be aware if you get earn  than £7500 a year from renting out a room you need to notify HMRC..

sourpuss2021

Yamor said:

Important to be aware that under UC you won't get the 2-bed LHA rate because of the lodger (unlike in HB).

Ah yes, I think I read that somewhere once before.  Good - or from my perspective, bad! - point! 

However I still think I’d end up getting the same amount, around £1400 a month towards a flat that costs £1850 + £330 to rent and pay bills on.  Because although my room eligibility on UC will only be at the 1-bed rate even with a lodger, I’ll still get the other components of UC to make up the difference.

It then sounds like I wouldn’t have to worry about the UC amount falling at times that I don’t have a lodger.   But not having the lodger’s income / needing to stretch out the lodger’s income to cover any void periods, would remain a concern. 

sourpuss2021

sheramber said:

Be aware if you get earn  than £7500 a year from renting out a room you need to notify HMRC..

Thanks yes and I’d definitely be hoping to be above this threshold.

I would also need to get my work eligibility straightened with UC quite quickly or else I’d be sanctioned and face more stress about making the rent and bills.  (Though I gather they don’t sanction the housing element, given the shortfall it would have the same effect).

Honestly I do need to get back to work.  I always used to, but right now I have a 7-year gap on my CV.   I’m likely the embodiment of the kind of person that the government says has become trapped on benefits and in self-perpetuating poor mental health.   But I’ll need some support in doing this as well.

Often I feel like I don’t have the energy for the commotion and aggro of London any more, not at the age I am now, or with London being as it is now.  But I’m not sure if I can envisage any alternative either given that I don’t drive.  Anyway, a way forward has to be found.