A benefits question: mum is downsizing, can she rent out the house to my sister who is in a council house?

[LylaLee]

Mum wants to move into a retirement sheltered accommodation. She has a 3 bed at the moment.

My sister lives in a 3 bed council house with 3 children and receives housing benefit.

Can mum rent the house to my sister and have housing benefit pay the amount they are paying sister right now? It would be cheaper than current rentals in the area, but the advantage to mum would be that she knows they won't trash the place.

Sister would be in a nicer area than where she currently is.

The council house is in a bad area but she can't afford to move somewhere nicer on housing benefit.

You can rent privately and receive universal credit. But once you come off the council accommodation route you are unlikely to ever get back on again. Your mum would have to register as a landlord and go through all the technicalities involved. I would check with the housing accommodation as areas vary.

It depends on your local authority so you'd need to ask there rather than on here as none of us know. My dad looked in to this a few years back and it wasn't possible in our area but was (at least at that time) in others. Whether it's madness for her to give up the council house depends how secure your mums financial situation is and if there is any chance she'd need or want to sell in the future.

I think you mum needs to consider what her will says and what will happen to your DSis and the house when your mum is gone. Ànd the implications for any sibling rifts .

That would be my concern. She'd never get another council house.

Who would pay for repairs on her mum's house?

In all honesty it's not worth the hassle due to most the reasons above it could only work if...

Your mum has a very large bank balance as in enough to pay for care& her own living expenses for the rest of her life.

your sister contacts council to ask their own personal policy on inter family rental.

You've discussed the very daunting what happens when your mother passes is the house named to your sister or split multiple ways ?

Is your sister financially accountable or likely to miss some rents because its mum ?

Also bear in mind who is responsible for house maintenance during rent I can't imagine on housing benefits your sister having enough money to cover boiler replacement roof repair ect and things like thay could eat into any money your mother does have.

A swap for your sister and a private rental / sale seems best for your mother

You didn't used to be able to have housing benefit to pay to family. My horrible ex neighbour used to do this though.

@LylaLee have a look at this group on FB.
This is the best place I’ve ever found to get good unbiased and up to date information on benefits.

https://www.facebook.com/groups/278260135547189/?hoisted_section_header_type=recently_seen&multi_permalinks=7173724662667334

Don’t worry about the fact it mentions ME. This is how it started but they are very happy to guide anyone around the maze benefits are.

My concerns would be

• Your sister may not qualify for housing benefit because she gave up a council home. How will she fund the rent due to your mother if that happens?

• Your mother will have to register as a landlord and comply with the legal requirements for renting out her home. This may involve a lot of admin./inspections or maintenance work on her home to bring it up to the required standard, which she may not be keen to undertake. The rent your mother receives would be classed as income and taxed accordingly. Of course, all of the above would apply if your mother rents out her home to someone else.

• Your mother could die six months after her move and the house would (I presume) be split between you, your sister and any other siblings you have. Where would your sister go then?

• The house might need to be sold to fund nursing home care if your mother becomes disabled or incapacitated. Where would your sister go then?

Are there shared ownership properties in the area?

I'm wondering if your mum could sell the house, then gift the profits to you and your sister, and if that would give her enough money to buy a small share in a shared ownership property, then she can claim benefits to cover the rent. This depends if there are properties available, if there's enough money for your mum to give each of you some, and still have enough left for her own needs, etc.

Agree with PPs that your mum keeping the house and renting it to your sister would be too messy.

We‘ve been renting to my sister in England, who receives UC. We‘ve been doing this 10 years. We had to fill out a form confirming she lives independently from us, why we had chosen her over non-relatives, and charge a market rent. There’s a full, rolling tenancy agreement. BTW, we haven’t increased the rent in 10 years and no one’s asked if the house is still rented at market value. We also have to follow landlord rules - insurance costing 350 a year and regular gas etc inspections. We file a tax self assessment every year and pay whatever tax we owe on our ‘profit’. It’s not the easiest form.

UC doesn’t cover anywhere near the full, now cheap rent, and it decreases as her children grow up and out. And there’s bedroom tax. We’re getting to the stage where the arrangement will only continue to make sense if we downsize to a smaller property.

While relatives can rent a property from you and receive UC, it’s most certainly not lucrative, there’s a lot of paperwork, and becomes less feasible as circumstances change.

And, in your case, you’ll need to look into the inheritance and future care costs aspects.

This is obviously not legal advice, just my experience.

If she’s receiving universal credit it will go to a decision maker. Unlikely to be awarded though as your mum hasn’t ever rented it out before and isn’t a proper landlord. Seen as a contrived tenancy

I’m quite sure that you can not claim housing benefit on a property owed by a family member.

What if your mum needs to sell house to pay for care further down the line? Unlikely your sister would be given another council property or certainly not quickly, she could end up in temp accommodation for a long time. Could she afford to save for a deposit whilst renting? Personally I would keep the council house and try to swop to somewhere else

The one thing I haven’t seen anyone mention is the Local Housing Allowance. Moving to another area would trigger a move to UC. Where they pay full council rent, they only pay up to the LHA for private renting. Has there been any discussion around rent etc? Would she be able to cover any shortfall if there was any?

This is correct - I was going to swap my social housing flat and found out it would have triggered a UC application whereas I'm not on that system. It's a big thing to consider if in receipt of HB.

you say, no se wouldn't, care to elaborate?

I've seen HB officers refuse on the grounds that the house is only being rented to family and wasn't rented out previously and wouldn't be rented out afterwards to others. This was back between 2017-2019 so things may have changed though

As others have said it's seems a silly idea. Why is your mum not keen on a private renter? They aren't all bad. If she has downsized and doesn't need the house why doesn't she sell it and with the funds either invest it or give your sister her share to put down on a deposit for her own house.
I personally think that it's a bit immoral to rent to relatives and take rent from the government. Fair enough if you're paying from your wages, but lining the pockets of a family member with benefits just doesn't sit right with me. Sorry

It is difficult to get housing costs in these circumstances and can I ask what country the property is in as if it is in Wales mum would need to register as a landlord and either get licenced or put a agent in who is licenced to be able to rent the property out. With out that then she will not be entitled to benefits for the property even if she gets over the issue of a commercial agreement . Also will mum require help to pay for the rent on the sheltered housing as the fact she has capital in the form of a valuable house is likely to mean she couldn't get that either. It is not a simple option and I would suggest as someone else has that she seems advice from the citizens advice bureau or Shelter / shelter cymru in Wales or /shelter Scotland if in Scotland . The rules on all of this are different in each country . Good luck

You are right this is something that was more common previously . Now there is the need to show it is not contrived. So if the property had been rented previously to some one who submit family then it is more likely to be accepted . But they will need to have a deposit which is protected. A tenancy agreement /occupation contract in Wales, and show they are prepared to give notice and evict If needed. It is not impossible but much more difficult now than it used to be

Yes and No.
The Government don't recognise family renting to each other SO: If your sister and your mother have same surname it could be difficult as Government thinks families should just live rent free with each other.......

I didn't think you can rent to a family member if the rent is to be from housing benefit or if your Mum has a mortgage on the property.

Thinking ahead - who is the house willed to?

assuming it doesn’t have to be sold for your mother’s care requirements. Will you be happy to not sell the house if you are inheriting 50%. Are there other siblings?

Rental income would be taxed and used in financial assessments for care provision

Your sister shouldn't give up a oouncil tenancy.