Housing benefit rent from parent?

[IDoDaChaCha]

In short, my mum is buying an investment property and has offered to rent it to me. I'm in social housing on housing benefit with horrible neighbours so I'm keen to move on.

She rang the council who said she has to have rented to the open market before she can rent to family and the rent be covered by housing benefit.

Does anyone know how long she'd need to rent on the open market before I could get housing benefit renting from her? x

OP, did your mum pay for the investment property outright or does she need help with the mortgage from the tenant ?

Housing benifit will be claimed by the op wherever she lives so what does it matter if it's paid to a stranger or her mum.
Op will have much more security renting from her mum at least she won't be worried every month if she's going to be chucked out or if rents going to keep rising.
Just a case of sour grapes on here I'm afraid.

Because social housing rent is far less than commercial rent.

I agree with the pps saying that the state are already going to be paying HB, it's irrelevant who the landlord is as long as the rent / HB are correctly assessed.

Are other people suggesting that the OPs mother should help her out by just giving her the money that she is otherwise going to invest in a property? The OP hasn't said why she's in receipt of HB or living in social housing, whether it's a long term / short term thing etc. She also hasn't said why her mother is planning to invest in property - it might be a long-term plan to provide for social care in the future or whatever. Most of my / our long term savings are tied up in rental property at the moment.

If, in the future, one of my children needed to move into one of our flats, and they were receiving HB, why is that any different to me having any other tenant who's in receipt of HB living there? As long as it's all above board, the rent is set correctly and the HB authorities are fully informed etc.

Though I have to agree that you really need to be aware of what you are giving up - and the potential pitfalls of renting from relatives. Presumably you'll still need to have a proper tenancy agreement if you rent from your mum - I'd suggest you talk through all the potential pitfalls that the pps have highlighted as well, so that you've both got the same expectations going into this.

Struggling with the posters whom are moralising over the OP's mother receiving housing benefit by way of rent. Like many BTL landlords (lender permitting) do then.

Agree with PP on proving the property is on a commercial basis. HB claim forms do ask the question if the LL is a relative.

We rent out a property to close family member on hb. We just had to demonstrate that this would be treated the same as any other renter e.g. property tenancy agreement etc. Dont see the problem with it. Family member has to claim hb, so why shouldnt they rent from me (with a fairly solid guarantee that they will never have to move) rather than another landlord, who may or may not end their tenancy after 6 months.

Depends where you live pookie, my council two bed flat, in an awful tower block is 480 a month. My friend privately rents a nice three bed house, she's paying 550. I'm in Birmingham.

So many judgemental people on here with narrow minded attitudes! Why is it any more unethical for her mother to receive HB from her daughter than a random tenant?

I am a single parent and working full time night shifts and still receive HB due to low income and high rents. What would you propose that I do to change that situation?

My mum and dad bought a very cheap 2nd property that was in a disgrace, spent ages renovating it as a family and then rented it to my cousin at a little below market rate. He paid using HB. Why is that wrong? When they needed property back (divorce) he got a council house.

My parents bought the house DP, DD and I live in outright, we are eligible for HB but my parents didn't feel it was morally ok for us to claim it and pay it to them as they don't need the money and can afford to help support us themselves, so they just don't charge us any rent. We are entitled to quite a lot in various benefits, but without the pressure of paying rent we have plenty to get by on without taking benefits. It is possible to rent from family using HB, but you have to prove that the arrangement is no different to if they were renting to strangers, so there has to be a tenancy agreement, they must take a deposit etc.

Could your mother let you live there for free for a period until you are able to earn enough to pay the rent or is she unable to pay a mortgage without rent payments? Are you expecting to be on housing benefit for life? Renting from family poses risks that you wouldn't have with a council tenancy with fallings out etc. I would be wary of giving up a secure council tenancy personally, although if your neighbours are bothering you I can understand the desire to leave.

Why doesn't your mum pay the fees to move for you into private rent? Then you can claim housing benefit there?

Plus the mortgage lender probably wont allow the property to be let out to a family member and if this was to be done behind their backs and it come out she would find it very difficult to get another mortgage or even remortgage that property. I'm admin for a mortgage adviser, we see this a lot.

Oh and to answer the OP, my mum and cousin had to file extra paperwork and out council set a limit to the amount of rent they could charge my cousin. They charged him below market rate anyway because they just wanted a certain figure to pay the mortgage on our family home or something.

I suppose the moral ambiguity is that there is a difference between happening to own a btl and then renting it to a family member, and buying a property intentionally to let to child knowing that it will be paid by HB.

OP look at this link. Having worked in the business I know that it can be done.
For those saying it is unethical, well the OP is renting and claiming housing benefit. Her mothers tenant could also be doing the same. If those tenants switched properties it wouldn't cost the council any more than they are already paying.
england.shelter.org.uk/housing_advice/housing_benefit/housing_benefit_renting_from_family

Personally I find it unethical for the state to fund your Mum's investment by HB.

Agreed, but I find it unethical that the state is using housing benefit to prop up an unjust housing market, cover shortfalls in wages from employers who should be paying enough that people can make their rent, AND covering up the fact that they sold of council housing so tenants who need fairly priced and managed subsidised housing can't get at it.

The OP's mum trying to make a long-term buck in a way that benefits her daughter is small beer compared to the wider picture. And her mum might be able to afford to buy a house with a mortgage that needs paying, but can't afford to buy one outright for the OP, and presumably the OP couldn't get a mortgage herself to be paid on hb (I don't know how it works but I guess not). So she's not got a lot of choices for helping her daughter here.

I mean, the whole system is massively corrupt but I don't think there's a massive moral wrong going on in this situation.

I agree with Ladyincement about the morality of the intention to buy a house and rent to a family member on housing benefit.

One day you will inherit this house. You will be able to thank the state for part paying off the mortgage.

Surely as hb rent is lower, it would be far more economical in the long run as for you mother to rent at market rates and you to stay put.

I think that's it, it's a corrupt system. No one should feel they have to give up stable social housing to move into private rent anyway, let alone a buy to let that is for profit. My overall issues are with the housing market and poor social housing not really the OP and mother for taking advantage of a perfectly legal option.

I would not rent from family unless I was desperate, and especially be cautious about giving up social housing. I would be concerned about the dynamic from mother - landlord could impact your relationship (even the best one)

I presume that all of you who say it is unethical, would prefer for the mother to rent to a third party and receive their HB rather than allow the mother to have her daughter as a tenant?

Rather than making money from money the mother should be looking after her daughter so the state doesn't have to

I take your point, but then it's interesting that this is rarely said about any other type of benefit - for example, I've hardly ever seen anyone claim that relatives should pay for disability benefits, unemployment benefits and so on

Hard, sometimes, to avoid thinking that a lot of this is down to the usual hatred for BTL landlords ...

Personally I don't see anything wrong in doing what the OP is proposing although the advice is generally not to give up a council house.

This is an interesting thread really as I think it shows a big shift in peoples attitudes towards personal responsibility and the state. Many are saying that the OPs mum should support her if she has the money and not go to the claim from the state. The introduction of more benefits instead of making businesses pay a decent wage, the ability for some people to claim quite a large sum in benefits (see previous thread where a OP was getting £1600 a month in benefits), the introduction of benefits like free school meals has meant that people 'expect' more and look to the state to provide. I also think that things like the expenses scandal saw joe public seeing first hand how people who should be setting an example and who already get well paid will take every opportunity to help themselves.

Unfortunately I think there is general culture in the UK of looking to the state or someone else first for help before looking at what you can do to help themselves first. Everyone else is doing it why shouldn't I.

It's worth going to citizens advice to check whether the council's stipulation that she must rent it on the open market is legal.

Why? They're protecting public funds. It seems a sensible thing to stipulate.

I'm quite surprised that it's possible to claim HB to pay to a LL you're related to AT ALL.

This happened to me. I was about to made homeless and by coincidence my mum had just bought a BTL house. She phoned the council about whether I would be able to get housing benefit and rent from her.

They said no.

She said, ok well my daughter has nowhere to live from tomorrow, so she'll be turning up At the council offices and you'll have to find her accommodation.

They changed their minds and said yes.

WildBelle - that's different.

You dont know her mums situation at all. This could be all her savings which she is investing for retirement. Handing it over to her offspring to help her out could leave her very poor in old age and possibly also attract the deprivation of assets rules. So long as the rent is not inflated it costs the public purse the same. Still think op would be crazy to leave social housing.

I have a btl. I intend to use some of that money to help my kids at some point but I would flinch at taking money from the state to directly pay my mortgage to house my child. It seems morally wrong. I know logically it wouldn't make much difference if it's going to be paid anyway but it does seem morally wrong. That may be hypocritical but that's how I feel.

I think as a pp said, it is the fact that this property is being bought with the intention and knowledge that it will be paid for by their dd's housing benefit.

I intend to use my money to help my kids, not to use my kids money/hb to help me. I think this is the crucial difference. Intent.

Why is it more ethical for the state to pay a strangers mortgage than her mothers? A commercial landlord will charge a higher rent to make a profit whereas her mum is likely to only charge enough rent to cover her mortgage. Everyone is a winner here, except career buy-to-let landlords. She gets a house, her mum gets peace of mind, the council pay less than usual out in housing benefit.