Claiming house benefit and paying it to the landlord family member

[PinkBump2022]

Iv been told by a relative that my other relatives are claiming housing benefit for living in a property owned by their mother and paying her the rent of £750 per month and have been since 2014….. and that someone else has reported them. If it’s true, what sort of problem are they looking at? Jail time? A fine?

They'll be made to pay it all back. This is something taken super seriously. I would assume suspended sentence(s) but I'm unsure of the process.

I think as long as there is a tennancy agreement and they are legally entitled to the benefit then its fine.

That's the issue the OP's asking about though.

Are the family members legally entitled to the benefit?

You are able to rent from family members, you do have to have a proper tenancy agreement. When the claim was made - if it was done properly it would have been referred to a decision maker, who would have either agreed or denied the claim. Did they not do this?

I think they are going to have to pay it all back. Not sure about a custodial sentence but they definately need a good solicitor.

Yorkshireteabags, back in 2012 at least it was not permitted to privately rent a home from a family member using housing benefit, worse still to lie about it.

Op, it's my understanding that they will have to pay it all back as a pp said but I've not heard of a case where someone actually served jail time for it.

There's information here.

I believe it is sometimes allowed - one of the factors is whether the rent being charged is inline with market rates.

I do not know if it was all done correctly or if they said they were no relation to the landlord. I’d say the rent is lower than average for the house and area as most houses around there are £1000 a month.

The rule is that you cannot claim housing benefit if you rent from a landlord who is a close relative and who lives in the same property. If your landlord is a close relative but does not live in the same property you may be able to claim housing benefit. It is therefore not as clear cut as some posters seem to think.

@prh47bridge I seee…. Well their mother has never lived in the house since they moved in so I guess this means They will be ok

I claimed housing benefit from 2006 to about 2018 in a property owned by my parents.

i had a proper tenancy agreement, they did have to check that the house was not bought for me (it wasn’t and had been rented out previously) so maybe it has been done in a legit way.

If they have a tenancy agreement they should be OK.
Hopefully the mother will have declared her rental income to HMRC.

That arrangement is perfectly fine as long as Mum doesn't live in the property and the tenancy isn't "contrived" and it's a commercial agreement. Ideally it's best if there is a tenancy agreement so that it's clear it is commercial.

If your friends are concerned they should get some advice from an organisation like Shelter or Citizens Advice.

The while point is that it needs to be treated just as a private arrangement.

If the house was rented privately before, they then let to daughter under exact the same terms, same rental amount, not in arrears, all required checks done, it might be ok.

If however the parents bought a house to let specifically for DD, agreed a lower rent amount than market rate, no rental agreement, checks not done as required etc..., than it is highly likely to be considered a contrived arrangement and while the money might have to be paid back.

I knew of a similar situation where both sides were prosecuted, I’m not sure under what law but basically what happened was the mother inherited a house from her own mother and rented it out to her daughter, her daughter claimed housing benefit for the rent then the mother gave the money back to the daughter so basically the daughter had another £500 in her pocket. I hope that made sense 🙈

You can rent from close family and receive housing benefit/housing costs on UC.

But

You must divulge the close relationship when making the claim.

There must be a legal tenancy agreement.

The rent must be in line with rents in the local area. Cheaper they don't mind, but massively more expensive they will not be happy with.

Like with any benefit claim, as long as you are honest when making the claim then it's fine.