Buying BTL for relative on HB (sorry, long)

[DearSlim]

I’ve nc’d as this may become outing, depending on what info becomes relevant later on.

My nan lives in a HA house and has health issues. I help her a lot, she is still ‘ok’ living alone for now, but I’m concerned about the future as her health has recently gotten worse.

We discussed her moving in with us a couple of years ago but she decided not to as she wanted remain independent. I have an inkling she also secretly felt like she’d be a burden (which definitely is not the case), as my OH was very poorly at the time.

In hindsight, our house isn’t anymore suitable for her than the one she’s in anyway (no space for downstairs bathroom, bedroom, there’s no logical way to extend it to make it work)

Between us, we also have 6 pets so 3 adults, a possible dc or 2 if OH and I ever get round to it, all the pets in our 3 bed terrace would be interesting to say the least.

Recently,I’ve been thinking what if we bought NDN house for the purpose of renting it to my nan. NDN will possibly sell in the next few years. The layout would allow nan to have a downstairs bedroom. We would also look at eventually putting in a bathroom downstairs.

I just don’t know how it would work/look etc with my nan receiving HB. Is it wrong to do this (legally/morally?). The gov site says claimants can rent from family as long as its a proper tenant/LL relationship. I’d obviously go through all the proper channels, annual gas checks, deal with repairs, etc.

But being completely honest, I’d have no intention of ever renting it out to anyone else. If my nan was no longer the tenant, I’d likely sell it. If we managed to pay off the mortgage quickly, she could scrap HB completely.

Me and nan have discussed the possibility of her applying to go on the housing list in the future, for an adapted property. She’s concerned about moving to an area where she doesn’t know the people, the shops, the routes etc. She still manages go for walks where she is, all the shopkeepers etc know her, so this is her community. It’s also within easy reach for me to go when she needs me, it’s a short distance from my work, city centre. She’s only comfortable with either staying where she is, or living very close to me which we obviously can’t dictate to the council.

I’ve looked at making a plan to buy a suitable property in the future, for us all to live together (so she wouldn’t claim HB to pay rent) but realistically it’s unlikely we’d ever be able to afford a house that offers enough space to cover all our needs. Buying NDN house would be doable.

Could this work? What implications could there be down the line? Is it fraudulent (I don’t know why it would be, but I don’t know the ins and outs of renting/benefit law) My concern is my nan and that she’s ok in the future, as her health inevitably gets worse. Of all the options I can think of, this is the one covers all bases. We’ll be available 24/7, but she can still retain independence and the comfort of her own home.

I’d love to be able to buy it and just give it to her for free, but I don’t think we’d afford the 2 mortgage payments. If and when we are mortgage free on this house, then paying for the 2nd wouldn’t be an issue.

I don't know the ins and outs but busing HB to basically buy yourself a house seems wrong to me, whatever your kind hearted intentions.

Hopefully someone will be along who is more knowledgeable. Otheriwse, speak to Citizens advice perhaps who can tell you what you are not/allowed to do wrt to BTL and HB.

Meanwhile, it's a few years old but here's a good forum link with some answers forums.landlordzone.co.uk/forum/housing-benefit-questions-hb-lha-dss/76722-able-to-rent-our-new-buy-to-let-to-daughter-on-housing-benefit

I should probably make it clearer why financially this seems to be the viable option:

We have 70k remaining on our mortgage. NDNs house is likely to be priced around 90k, 100k max - so after deposit that mortgage would be 75-85k

Properties which would be large enough to cover what we need tend to be 250k minimum, due to the areas they’re available in (more ‘affluent’).

If we all lived together, we’d need 3 bedrooms for me, OH and hypothetical DC.

Enough space downstairs to give a living room, a downstairs bed and bath for nan and another downstairs room like dining room or study, for it to be nans ‘personal space’ so she’s not constantly couped up with us (and having to watch footy with OH all the time). She does enjoy living alone.

We’d also need to make sure all the pets can fit easily, with no turf wars.

busing HB to basically buy yourself a house seems wrong to me

This is my reservation. It does feel wrong.

I’m trying to see it as an official LL/tenant setup, in which case it’s no different to renting to a stranger on HB. But the emotional attachment skews that view for me.

As such it would be temporary until we were mortgage free on one property, or if we happend to increase disposable income in some way (through better earnings for example). But, I can only make plans based on our current income.

Thanks, I’ll have a read of that thread too.

Crikey if it’s legal why is it wrong? At least your Nan wouldn’t be at the mercy of an unscrupulous landlord. Go for it OP and ignore the suggestions that it’s immoral what a load of tosh. Be great for your Nsn to have you next door as support.

The problem I see is that the rules may well change in the future. A relative of mine has a severely disabled son in his 20s. They were looking at buying a small flat for him, adapting it for his needs then he could pay the mortgage out of his benefits. They won't let them do that as they will only pay for rent and they were told they couldn't get round it by renting it out to him. The point was they were trying to secure the future of their son but are not allowed to!!

pannalash

This is what I’m having an internal struggle with (possiby a bit OTT there!).

From reading the link posted above, it seems it has to be a clear ‘commercial’
arrangement and that I’d be willing to evict her for non payment of rent, should it be an issue.

Obviously that would be a big fat no, but I’d have to lie and say I would. It’s the lying part that makes me feel like I’d be abusing the system in a way.

They were looking at buying a small flat for him, adapting it for his needs then he could pay the mortgage out of his benefits.

Was that including any benefits, like PIP (assuming he receives it)?

My nan receives that, and at a push, a very difficult push, we could potentially pay it 50/50. It would be hard, but worth it in the end.

I understand where local authorities are coming from with this, but ultimately (atleast in the case of people with disabilities) allowing something like this would surely take the pressure off social housing, or relying on state funded adaptations etc.

I’m sure we’ll figure something out!

I don't know the ins and outs but busing HB to basically buy yourself a house seems wrong to me

Every other BTL landlord who takes HB is doing the same thing. Why's it so different for the OP? At least she's not going to be a scumlord.

Yes he gets PIP and has his own mobility car which his carers use to take him out in. The rent/mortgage would have come out of his housing benefit. At the moment he is at home because his 'sheltered housing' didn't work out as he has occasional meltdowns and the neighbours complained! It's very difficult at home because he doesn't get on with many people so it really restricts who can come into the house and makes life very stressful.

That’s sad double when the most suitable option isn’t allowed.

From a little bit of googling, it seems the counc tend to say no even though it’s technically allowed if you follow certain rules. So I’ll probably be comtacting CAB instead just incase.

I’ll also have to see what the mortgage rules are with different banks, as pp pointed out they could be restrictive too.

It sounds like I have to be less than forthcoming with the full details if I speak to the different organisations to get a clear answer. Feels very shady!

You will need a BTL mortgage for this and it’s difficuot to find one where renting to family is allowed.

So you’re proposing lying to the council so your nan commits benefit fraud, and I guess lying to the lender and so committing mortgage fraud.

Wouldn’t it be easier to tell the truth?

Well, you could say that yes, you would have to evict her if she didn't pay her rent, because you couldn't afford the mortgage if she didn't. That's the same as if you had a lovely tenant, isn't it? In the end, the mortgage has to be paid.

I wonder whether your nan might be happy in a sheltered housing kind of place, where she could make friends her own age.

I've got a buy to let mortgage and forbidden from renting to family.

Dependent on how the HA re-housing is managed in your area it may be worth considering her going on the list now. In my area there is datal priority so it can leave options open for the future.

By your house prices I am guessing you are up North somewhere, often there isn't the same pressure as other areas. Some areas have higher demand others not so much. It is best to keep options open, the ndn may never move.

If you can legally do it, morally I can't see the issue. I don't see the difference between housing benefits being used to pay a mortgage for the op to housing benifits being used to pay a mortgage or just pure profit for any other private landlord.

So you’re proposing lying to the council so your nan commits benefit fraud, and I guess lying to the lender and so committing mortgage fraud.

The OP has not said she will be lying to anyone, nor her nan!

There are two issues here OP.

You'll need a specialist BTL product. They are available but they your options will be more limited. It's likely they'll expect the rent to be a certain percentage above the mortgage payment, and this may not be covered by HB (you can check the relevant LHA rate on your council's website).

The local authority will need to be satisfied that it is not a contrived tenancy. You'd need to charge a market rent, to fulfil relevant regulatory requirements (gas certs, deposit protection, declaring income and paying tax accordingly). But where you might fail the test is that you won't let the property to anyone else, that indicates it is not a commercial tenancy/ is contrived in order to claim benefits.

I'm surprised at those that criticise what you're trying to do, when the alternative is a landlord who will charge excessive rents and fail to maintain their properties.

Not all councils will fund hb for renting from family or may insist it is market rent with a formal ast.

You'd need to charge a market rent, to fulfil relevant regulatory requirements

I think this is where it won’t workout, as I wouldn’t charge market rent. Unless I ‘did’ but I just paid the top up instead of taking money from my nan. But again, there’s the dishonesty element of that. I would however definitely do everything else properly, ie official tenancy agreement etc.

To the pp that said I proposed to lie, I did not. My point in an earlier post was that on some forums, people have said councils have said it’s not allowed, when
it is legal, as long as you follow certain rules. It sounds like as soon as you mention ‘relative’ and ‘benefits’, they don’t hear anything past that.

If I spoke to them and said I was proposing to let to just someone on HB, not specifying who, there wouldn’t be an issue.

I had no idea about the mortgage aspect either. I imagine a specialist product would be more expensive.

On the one hand I agree with a pp, it’s no different to letting to a stranger in principle, but it does just feel dishonest because I don’t have the intention of fulfilling the more negative aspects of a tenancy agreement.

As it stands, there may be a few years before we have to do anything. Her main health issue is sight, she only has 50% vision in one eye and zero in the other (along with some mobility problems too). It’s inevitable that she’ll lose all her sight, advised by the consultant. It might just be the case of me and OH doing what we can to be able to fund 2 mortgages later on.

I’ll have to look into it and see if it would breach general BTL, if she actually lived there for free.

Thanks everyone for the replies