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Can you get housing benefit if you rent a property from a family member

(20 Posts)
Ledkr Wed 12-Jun-13 21:29:27

Asking for a friend who is a lp working part time has two dc and currently gets full HB for a low rent flat but has a great opportunity to rent a nice little house owned by her mother.
Thanks in advance for replies.

mypussyiscalledCaramel Wed 12-Jun-13 21:36:30

Yes you can, as long as you remember to tell them its a family member, otherwise they get a little upset and mention fraud and court and stuff

20wkbaby Wed 12-Jun-13 21:46:01

We have a rental property and the terms of the mortgage prevents us from letting to a family member, so if they haven't already they should probably check that in case -assuming property is mortgaged of course.

Graceparkhill Wed 12-Jun-13 21:48:40

It can be done but the local authority will scrutinise very closely to make sure it is not a contrived tenancy. Need to have all documents- lease/ rent schedule complete.
PM me if you would like more info or check Shelter website

Yes I rented off my mum and got housing benefit whilst DH was unemployed. I think I showed them my bank statements to prove I was paying rent and did tell them she was mum.

ThisIsMummyPig Wed 12-Jun-13 21:55:05

The arrangement will need to be commercial - ie the property will need to be let at the market rate, any shortfall between the rent and the HB will need to be made up by your friend.

Its difficult to say without knowing if the property has been let out before, why the property was bought, a little about the mothers circumstances.

It can happen, but these arrangements can also be fraudulent. If your friend is not honest in her application form, then the council are very likely to suspect fraud.

Branleuse Wed 12-Jun-13 21:57:51

That must be a new thing then, because you never used to be able to. It would be seen as a contrived tenancy.

http://www.consumeractiongroup.co.uk/forum/showthread.php?274751-Claiming-housing-benefit-where-house-owned-by-relative

Branleuse Wed 12-Jun-13 21:58:01
Rockchick1984 Wed 12-Jun-13 22:45:05

Bran it's only a contrived tenancy if the landlord or tenant benefit through their relationship - in the link you provided the parent was only buying the property for her daughter so would be an entirely different situation to if she had already got a property which had been rented to a stranger, then later rented to her daughter on the same terms as to the stranger.

minsmum Wed 12-Jun-13 22:52:40

The local authority will be checking very carefully to make sure its not a contrived tenancy. They will want to make sure the property has been rented before and will be again after she leaves, she has a proper tenancy agreement, be charged the proper market rent and be treated like a non family member would be . If they have the slightest indication that it is a contrived tenancy they will not pay.

However if it is a proper commercial tenancy then they would pay housing benefit

Ledkr Thu 13-Jun-13 07:37:05

Thanks for replies. Yes the house is already and has been rented out for years.
Thanks again

SalvatoreGirl Sat 15-Jun-13 00:26:21

As I understand it one of the conditions for it not to be considered a contrived tenancy is that the landlord (mum) would evict the tenant(s) if there were rent arrears - would this really happen if the tenants were daughter and grandchild ?
Don't think I could do it to my child and grandchild.

Rockchick1984 Sat 15-Jun-13 00:48:39

If the tenant is on full HB then this wouldn't be an issue surely, as the full rent is being paid by housing benefit therefore no reason why the daughter wouldn't pay?

Xenia Sat 15-Jun-13 15:19:50

Yes, I think an MP or someone was doing it recently. I think it's bad practice and should not be allowed personally but I thin it is permissible under the rules.

Ledkr Sat 15-Jun-13 17:32:49

The mum is fairly ruthless and moneygrabbing wise so I think she probably would evict I'm sad to say.

TheRealFellatio Sat 15-Jun-13 17:42:34

Are you all sure about this? I was under the impression that it CANNOT be done - in fact when I was looking onto taking tenants getting HB for one of my properties I am sure I saw that this was expressly forbidden, and that was only a few months ago.

ThisIsMummyPig Sun 16-Jun-13 00:29:50

Fellatio - yes - I work in Housing Benefits, and deal with appeals/tribunals etc. If the arrangement is commercial, and they are not living with the landlord as part of the household then it is fine.

There is loads of caselaw around it, as each case is different, but if you are a commercial landlord, and rent out properties regularly, either directly or through a managing agent, then if you wanted to place a family member in that property there are no rules to stop you.

Indications of commerciality
Did the tenant pay a deposit
Is the deposit held in a scheme
How was the rent set (in line with the LHA rates - higher or lower than previous tenants)
Is there a shortfall in the rent/ if so how will it be paid
Will formal proceedings (ie eviction) be taken if rent is not paid
How is the rent collected
Has any been paid to date
How long is the tenancy for
Has the property been let before
Would the property be let again if the tenant moved out
Who pays the bills - water etc
Are there any terms in the tenancy agreement that are unenforceable?

The case should then be looked at as a whole. (assuming it's being dealt with by someone who knows what they are doing.

Sorry for length of post.

TheRealFellatio Sun 16-Jun-13 03:56:05

That's good to know, thanks MummyPig, especially as I have a situation within my own family where this might be an issue in the next few years.

Pammie70 Tue 18-Jun-13 13:05:12

Think I might be getting into this position myself. Am getting divorced and selling our home, DM has a house that has had tenants for about 10 years and they are moving out in a couple of months so available for us if the house sells quickly enough. Will need to try and get help with rent as single parent with two children (teenagers but in full time education) and only earn about 13K. May come out with about 12K equity after joint debts paid, does anyone know how much savings you can have as was thinking about putting this into a pension as I don't have one and didn't plan to be single after 20 years.

MarthasHarbour Tue 25-Jun-13 15:45:09

I know for a fact my cousin did it 10 years ago, she was completely honest in her claim forms. Her mum didnt live at the house, and hadnt rented it beforehand. But it was all legit.

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