Contrived tenancy? HB ?

[Frecklesandspecs]

Feeling very doubtful the more I read....

JUST separated from h and I have the three children. We tried to get somewhere to rent in the area but there was nothing (privately)
My mum then decided to buy up a property that we could rent off her (she has her own house obviously so won't be living with us)
She has to pay the mortgage and I'll have to pay her rent to cover it.

I think I'll be just about able to manage without but it will be very tight. (I've just put claims in for IS and CTC)

She's getting her financial advisor to draw up an official contract and I'll set up a direct debit but I'm not very hopeful as it might be seen as a contrived tenancy.

Has anyone had any success in this scenario?

It's very rare to be able to get housing benefit from a family member. Usually, it only succeeds if the property has previously been let out, and you are paying the market rate.

If your mum has bought a property for you to rent from her, that is a contrived tenancy, and you won't be eligible.

She'll need the market rent. She has a buy to let mortgage and if I wasn't taking it she'd have to let it out straight away. I'd be paying her full whack.

How is it contrived though if it's a commercial set up?

Surely this is exactly what a contrived tenancy is?

I wish I'd known this before we went down this road as I'll be £700 out of pocket now and living off CTC with three children. Big mistake. Theres no way my mum can afford to pay the mortgage without someone renting it at market price.

The new rules from what I've heard are quite strict as regards renting from a family member. And if you do go ahead and don't disclose your Mother is your landlord you and she could both be prosecuted. Not saying you would do that of course. The best thing is for your Mother to rent her property out commercially to cover her mortgage and you to find somewhere else to rent.

I rented a house from a family member, same last name and we were open that he was my uncle, no probs with claiming housing benefit at all. Which is fair enough because we were genuinely renting at full market rent!

Ah sorry just seen the pp, this was 5 years ago so maybe the rules have tightened up

If your mum has a financial advisor, did she not check this out before she went ahead? It is the very definition of a contrived tenancy.

A tenancy agreement means nothing, everyone who wants to claim needs one. Paying the market rent is a small indicator that is usually used when the property was previously let to unrelated tenants. It shows that no loss was incurred.

Your mum would likely need to let the house out as a landlord, to an unrelated tenant, before you could realistically try and claim HB or LHA for it. Then paying market rent would be important because you could show that your mum incurred no losses letting to you and is treating you the same as a normal tenant. She'd need to prove that she is a landlord first, though.

As she bought the house to let it to you, the tenancy was contrived, and you will be turned down. Not declaring that she is your mother will end badly because they'll find out, and then you could be prosecuted and end up with a caution or conviction for fraud, as well as having to pay back every penny - and they will soon have the ability to recover over payments from other benefits, so you'd risk your CTC. I believe they can currently take 25% maximum, rising to 45% shortly. There is a question that asks if the house is owned by you or family, so you'd have to lie in writing and repeat that lie at every renewal.

If your mum can't afford for you to live there without HB contributing to the rent, which is perfectly normal and understandable, she'll need to let it on the general market and you'll need to find a property not owned by a family member. In a few years, you could ask the council to consider it as a normal, non contrived tenancy, but the rules on this are tightening and it'd probably fail, to be honest. It's so strict now. It didn't used to be, but new applications are checked strenuously.

I know it's not what you want to hear and I'm sorry (although I have nothing to do with making the rules!) but it's better to find out now than further down the road.

If she has to rent it at the market rate, you've got no problem. It would be contrived if she would allow you to stay there even if you didn't pay any rent or if she charged much below the market rent. If you have an official tenancy agreement and your mother will make you stick to it, that's fine

Personally, it does piss me off that you will inherit a house that your benefit money has paid for but you aren't doing anything illegal.

Anchor it's unlikely that a Tribunal would rule this arrangement was contrived, if there's a genuine tenancy that the tenant has to stick to and a normal level of rent charged. If the tenant doesn't pay rent, she'll be evicted. In what way is that contrived?
In fact, the landlord's preference to rent to a relative is OK too, because then she can be more confident the place will be looked after and the tenant can't just do a runner.

SeldomAthleticFC in theory yes but in practice it is proving that it isn't a contrived tenancy, it is proving that the mother would evict if the rent isn't paid. It is easier if it is an already established property but in this instance the council would dismiss it straight away.

It isn't an issue if you just pay the rent. What is the gap between your earnings and the rental?

I briefly claimed partial housing benefit when renting a house from my dad. We were his first tenants in the property. The council grilled him over the phone about whether he would evict us if we didn't pay the rent...he said of course he would! We pay market rent and he does all the landlord type paperwork including gas checks etc. Then my hours went up at work so thankfully I didn't have to claim for longer than a few months.

Ty all. It's actually my first time claiming benefits. My h has always worked at 40 per cent tax rate so we've no been entitled to anything. I have two children under 4 so have not been working since I had the kids (6,4,2)
My mum doesn't really understand anything about te system either as she's never claimed. We just should have looked through it properly.
Seldom, I see your point there about the inheritance, it's a good one.
I think I'll probably just leave it. I worked out all the finances last night and it will be tight without it. I will HAVE to pay my mum the full rent, theres no question about it (she's that sort of woman!)
She said she'd reduce it by £20 if I was struggling!)
I've not started on a divorce yet, but hopefully I'll get some kind o settlement if I do further along.
Our marital home btw which I left is only in my h's name so I don't actually own anything at the time being.

But yes, I'll have to try and start working soon I think if I can get childcare. No problem with that.

m.england.shelter.org.uk/get_advice/housing_benefit_and_local_housing_allowance/what_is_housing_benefit/housing_benefit_if_renting_from_a_family_member
Shelter says it's fine as long as you are paying market rent etc.

You should apply for benefit. Tell them the truth and let the local authority make the decision the worst that will happen is they turn you down. It's not illegal to apply for benefits.

And now, I think I read this which I why I'm confused about the different opinions - ty, Maybe I can ask them.
True mins, Guess I won't lose anything by trying.
We looked for places to rent before my mum decided on this, maybe if I gather enough proof we tried.

Also, if I had stayed in the family home, theres no way I could have paid the mortgage. In h's name anyway but if he wasn't living there iyswim?(1300 a month) What do people do then?

It's entirely up to you but you are well within your rights to apply for HB. Just be completely honest about the situation and, if the council turn down your claim, you can appeal to an independent Tribunal. I work in benefits reconsiderations (the stage before an appeal to tribunal). If it was up to me, based on the info you've provided here, I would probably award HB as I think it's most likely you'd win at Tribunal so it would be a waste of public money to fight it.

In any case, you should apply to the council for Council Tax Reduction.

I woukd have thought this would be strictly a no no.

What is the house was passed down to you via your mums will and you have lived in it with the LA paying your rent for X years then you own it?!

Really can't imagine it will go through but you need to ask!

Good luck and i hope your housing situation is resolved quickly

Its a contrived tenancy.

The property was purchased with the sole intention to rent to you directly. It has not been let to anyone before. Your mother has no other properties she rents out.

It's contrived.

I agree I think it will be classed as contrived. I think the contrived tenancy rules were brought in to make sure that a person couldn't buy a property for another specific person to live in knowing it be paid for by HB, but trusting that it will be more secure than renting to a potentially bad tenant/ stranger. They look at whether there is a tenancy agreement, whether market rate is paid for rent and whether there have been other tenants in the property to check that the tenancy hasn't been contrived for the purposes of a family member benefitting financially from a HB claim.

I live in a property owned by a family member and pay rent. If I had to claim HB they would be able to see I've paid the same rent for years and that the property was rented out for 10 years before I moved here. I would hope they would pay HB.

Your situation is exactly what they are looking to avoid. A contrived tenancy where your mum is buying a property specifically for you which will be paid by HB.

Could you possibly stay there for a year before claiming HB? At least they will see you have paid full market rate yourself and it will appear the property wasn't bought with reliance on HB in mind?