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Renting from a family member

edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
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Sally_StrawberrySally_Strawberry Forumite
3 posts
edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
My parents are interested in buying a property in Caerphilly, Wales and renting it out to me. They would be cash buyers. I'm on ESA (work group) and currently live at home with them. If I rented the property I would have to claim housing benefit. I've checked the local housing rates for Caerphilly which would amount to £320pcm for 1 bedroom. Are my parents allowed to rent a property to me? They're interested in buying a 2/3 bedroom house but I would only be able to pay £320pcm in rent. Does the property they choose to buy have to be rented out at the current market value rent? Thanks.
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  • SlitherySlithery Forumite
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    Are my parents allowed to rent a property to me?
    Yes.
    Does the property they choose to buy have to be rented out at the current market value rent?
    If you want to claim housing benefit then yes, it does.

    The term you need to read up on is a contrived tenancy.
  • babyblade41babyblade41 Forumite
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    Your parents must not confuse helping you out and getting rent via HB , that would be a contrived tenancy.
    The rent would have to be in line with current rents for the type and area, all gas certs etc and be ready to evict if necessary.
    It is very hard to make it work under the strict guidelines of claiming benefit. They must be first and foremost LL's and not anything else .My advice would be not to do it , it can cause more problems than it solves
  • Sea_ShellSea_Shell Forumite
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    You'd also need to consider what might happen in the future if your parents need to release their equity in this property if their circumstances change.
    " That pound I saved yesterday, is a pound I don't have to earn tomorrow ":beer: JOB DONE!!
    This should now read "It's time to start digging up those Squirrelled Nuts"!!! :j:j:j
  • KatrinaWavesKatrinaWaves Forumite
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    The situation you describe fits quite clearly the definition of a contrived tenancy under which housing benefit would not be payable.

    It is quite difficult to get housing benefit on a property that your parents have bought solely to rent to you who claims housing benefit, as it is clearly not commercial. Charging you a low rent to match your housing benefit is another contrived tenancy factor.

    If your parents want to invest in property, they are free too, but they cannot use the benefits system to get their money. If your parents want to help you, they are free too, but they cannot manipulate benefits in order to help themselves at the same time.
  • Thanks everyone for your advice. It's clear to me that it's against all rules and would look like a contrived tenancy. I've been looking for somewhere to rent in Cardiff from January this year but it's hard to find a landlord that accepts housing benefit!
  • LocoLocoLocoLoco Forumite
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    Thanks everyone for your advice. It's clear to me that it's against all rules and would look like a contrived tenancy. I've been looking for somewhere to rent in Cardiff from January this year but it's hard to find a landlord that accepts housing benefit!


    Is it possible to look a bit further out? I was looking to move to Wales a couple of years ago; Cardiff was very difficult to find HB friendly landlords but I looked up to about half an hour out and found other places that had more HB friendly lettings. I was also able to put my name on the housing list even though I didn't live there; the lists are long obviously but if you're not on it yet it might be worth putting your name down (got to be in it to win it and all that :) ). Hope you find something soon.
  • Your parents could rent their flat out at the market price and give you the extra from £350
  • Your parents could rent their flat out at the market price and give you the extra from £350

    Oh I didn't know this was allowed?
  • CakegutsCakeguts Forumite
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    Your parents could rent their flat out at the market price and give you the extra from £350


    Wouldn't that affect the benefits claim?
  • KatrinaWavesKatrinaWaves Forumite
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    Where is this 'extra money' coming from? The OP will only GET the HB amount, so where is the 'extra' coming from...
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