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

I know it sounds hypocritical isuppose
Maybe because my tenants don't receive hb, but then again if it made business sense then I would accept it. I don't know. I just feel uncomfortable with it all being so interlinked.
The state paying the mortgage that the dd may eventually inherit. I.e. Getting a completely free house?
Not logical but an emotional response.

not everywhere Pookie i pay £350/month for my council house similar house private rented would be £400 we dont all live in the se.

Because yes effectively a stranger will not inherit a 'free' house

It's a potential benefit not a guaranteed one but it is slightly morally not quite right for many people. I think that is perfectly fine to have that opinion

Yes I am SE and rent is extortionate

HB regs specify that if HB is paid when a landlord is a close relative, it must be a genuine commercial arrangement. However, they don't set out criteria for determining this, so councils' practices vary.

Just in the county I work in, one council asks to see evidence of a rental history for the property going back at least 3 years. If the claimant/relative has been the tenant during that period, they have been known to ask for 3 years bank statements from both landlord and tenant. Another refuses to touch it unless the property is managed by a letting agent (although I'd be minded to challenge that, as I think it's unreasonable). A third wants to see evidence that it has been let outside the family for at least a year.

It's an area that crops up regularly on benefit adviser forums and afaik there's little case law on it.

My sil owns 3 houses she rents to family members on housing benefit. She said she will only rent to family members because she can trust us.
She asked us to rent one of her homes and the rent was £150 a month more than what we're paying now. Nicer house and nicer area than what we are in now. We told her we couldn't afford the rent. She hinted that she wouldn't have a problem sayin that dp was living with her and not me. She said she would be easier if the house was just in my name anyway. We declined only because I would have felt like I was living in her house and not my own home.
I had no idea it was so underhand

Because yes effectively a stranger will not inherit a 'free' house

Or, to look at it another way, a house that's been paid for by the state. But then that applies to any BTL house that's been paid for by HB.

I'm not surprised that the council want to see a rental history. Otherwise many wealthy people could buy a nice pad, install a non-working dc in it and get housing benefit. Presumably for example Prince Andrew/Sarah Fergusson could buy flats for Beatrice & Eugenie (who have not troubled the workplace) and get the mortgages paid with housing benefit.

I know this might irritate people but do people mind paying £500 a month for a house to live in regardless of housing association or private rental It's x 3 that in SE.
I don't see an issue with a housing association charging market rental rates for a secure home with as much protection and facilities management as you would be offered, that you do not get in the private market.
Not sure you could buy any kind of house with a mortgage that low without a giant deposit.

Two things, first being don't lie about being related. If they find out you are it looks like you lied solely to obtain benefits which could lead to a prosecution for benefit fraud.

Secondly, if your mum is buying to rent out just to you in exchange for the benefits rent then the local authority will determine pretty quickly that you are ineligible and they will watch and wait to see if you obtain rent arrears and if your mum takes steps to legally evict you. You need to have proper tenancy agreements, rental rates which reflect the current market and also cover what steps would your mum take if you had rent arrears.

I have seen local authorities refuse some claims and process others but it does depend on the likelihood of the tenancy being legitimate, if they suspect its not they can (and sometimes do) suspend/investigate your claim further.

i prefer living in my council house as its more secure that said in my town its not that hard to get social housing [i live in the north west] i got my house a few months after applying with no priority whatsoever, you can buy a decent terrace house here for around £80,000

what real difference does it make whether the money goes to a housing association or a family member?

HA property will be available for other tenants eventually, in the mean time the rent is used to build more affordable homes.

OPs mother is having a property bought for her by people who cannot afford their own property ie me.

And once the mortgage is paid up she will make pure profit.

Anyway i thought buy to let mortgages were usually interest only? So no tax payers buying houses for anyone, really, all just lining the banks pockets yet again...

Otherwise many wealthy people could buy a nice pad, install a non-working dc in it and get housing benefit
It doesn't work like that.

As a topic for my Mum discuss at her community action group, we both did a lot of research about local rents, LHA rates and the complete lack of property available at an affordable price for people who are claiming LHA.

An average two bedroomed property where I live costs between £750 and £1,100 PCM to rent.

Today on Rightmove in my area there are 15 - 2 bedroom properties available to rent.

Out of those 15, only 5 of them do not state No DSS / HB / LHA or No children in the advert.

These 5 properties range in rental from £750 PCM to £850 PCM.

The LHA rate (2 bedroom) for my area is £663.09.

So even if somebody managed to get a tenancy on the £750 property, LHA would only cover £663 PCM and the tenant would have to pay a top-up of £87 a month.

£87 a month rent top-up may not sound like much but if you are on benefits like IS or JSA, this amount is a big percentage of your income.

No private LL is going to rent to someone at LHA rates when they can get much more money from someone who is working.

This has meant that parents like the OPs feel they have no other option than to buy an investment property specifically for their child to rent.

Anyway i thought buy to let mortgages were usually interest only? So no tax payers buying houses for anyone, really, all just lining the banks pockets yet again...

Market rent will usually cover capital repayment, though.

Forgot to add.

A lot of the baby boomer generation had mortgages when the interest rates were running at 12% - 15%.

They saved as much as they could as they thought that in their old age they would be able to rely on the interest from their savings to give them a steady income in retirement.

Then interest rates fell through the floor and savings in the bank no longer provided them with anything like what they expected.

Is it really that wrong that they are trying to provide for their retirement by investing in property and at the same time helping their child, who cannot get a home of their own due to the ridiculous cost of buying or renting a home.

It is if they're essentially "fronting" a mortgage for a non working child and public funds are picking up most of the cost.

ExSIL and her DP bought a house to rent to her sister who's on benefits. They got around it by just having her DP on the tenancy agreement but should the council (and their mortgage company) find out then all Hell will break loose.

Either more houses are needed or they're not. If someone has a house to let and a dc that needs that house because they are homeless or whatever I really can't see why they wouldn't let it to them with the child claiming HB. Their child is an independent adult. According to the laws of the land they can go to the doctors from about 13 without any consultation with the parent, they can get pregnant, they can vote from 18. They can claim benefits if they can't get a job. Why is it different for children of parents who have a bit of money, presumably and normally because they've worked hard etc, but not for others?

If someone has a house to let and a dc that needs that house because they are homeless or whatever I really can't see why they wouldn't let it to them with the child claiming HB.

For the same reason that in the public sector, if a manager has a vacancy on their team they need filling and a jobless child, they can't simply hire their child on the public's dime.

There are additional safeguards built into the HR processes where candidates are related to e siting staff members.

For the prevention of cronyism, corruption and fraud.

It's because it's public money^.

It is a problem in areas that rents are below HB max payments. So instead of renting at market value they rent to HB max and renting to family members who are complicit in making sure the landlord is receiving more than they would on open market. It was common in my hometown they did have rules on history of open market renting not sure if they still do.

persiancat good points - mn has the memory of a goldfish so won't know this. Although interest rates were that high well after the baby boomers.

The btl boom is very much to do with low interest rates. There is nothing else you can do with savings that won't destroy them with inflation. Whoever runs this can't work this out.

PersianCatLady exactly! Everything you just said.

Why should the Council effectively buy a house for your mum?

Of course it is unethical to say that if the council are paying housing benefit to social housing then what difference does it make whether they are paying it to the OP's mum. The OP's mum could financially help the OP out of her unfortunate housing situation instead of investing in a buy to let and allowing the taxpayer's money to pay the mortgage, most likely resulting in a capital profit should she ever sell the property.

The money not spent on the OP's housing benefit could then be used to fund the emergency services, schools, NHS etc. That is why it is unethical.

I am all for people being subsidised when they have no other means, but this is why as a country we are so dependent on the welfare state. Benefits are a last resort, and abusing the system like this is an insult to the taxpayer and an insult to those that genuinely need support.

Until people loose the attitude that they are entitled to be funded by the government we will never get out of the current crisis. There will always be stigma attached to benefit claimants, whether genuine or not, if this continues.

OP - I do not mean to be unkind because you simply wanted an answer to a question, not to be fed the moral high ground, but I think you are going to hear from plenty others who are exasperated at this sort of situation.

Why should the Council effectively buy a house for your mum?
So, if there were two people like the OP and two mothers like the OP's mother where DD1 lived in DM2's house and DD2 lived in DM1's house, then there is nothing wrong with them both claiming LHA??

However, if DD1 lived in DM1's house and DD2 lived in DM2's house, then it is wrong for them to claim LHA??