PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

Renting from a family member

Sally_Strawberry
Sally_Strawberry Posts: 3 Newbie
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.
«1

Comments

  • Slithery
    Slithery Posts: 6,046 Forumite
    First Anniversary Name Dropper First Post Photogenic
    Sally_Strawberry wrote: »
    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.
  • babyblade41
    babyblade41 Posts: 3,932 Forumite
    First Anniversary Name Dropper Photogenic First Post
    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_Shell
    Sea_Shell Posts: 9,338 Forumite
    First Anniversary Photogenic Name Dropper First Post
    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.
    How's it going, AKA, Nutwatch? - 12 month spends to date = 2.31% of current retirement "pot" (as at end March 2024)
  • KatrinaWaves
    KatrinaWaves Posts: 2,944 Forumite
    First Anniversary Name Dropper First Post
    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.
  • Sally_Strawberry
    Sally_Strawberry Posts: 3 Newbie
    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!
  • LocoLoco
    LocoLoco Posts: 420 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Sally_Strawberry wrote: »
    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.
  • Housebuy12345
    Housebuy12345 Posts: 211 Forumite
    Your parents could rent their flat out at the market price and give you the extra from £350
  • Sally_Strawberry
    Sally_Strawberry Posts: 3 Newbie
    Housebuy12345 wrote: »
    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?
  • Cakeguts
    Cakeguts Posts: 7,627 Forumite
    First Anniversary Name Dropper First Post
    Housebuy12345 wrote: »
    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?
  • KatrinaWaves
    KatrinaWaves Posts: 2,944 Forumite
    First Anniversary Name Dropper First Post
    Where is this 'extra money' coming from? The OP will only GET the HB amount, so where is the 'extra' coming from...
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343K Banking & Borrowing
  • 250K Reduce Debt & Boost Income
  • 449.6K Spending & Discounts
  • 235.1K Work, Benefits & Business
  • 607.8K Mortgages, Homes & Bills
  • 173K Life & Family
  • 247.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards