universal credit and the spare room

[dontknowmuchaboutbenefits]

Hello, I'm wondering if anyone knows about universal credit if you're on your own in a rented two-bed flat.

Can you claim universal credit if you're living in a flat that technically has two bedrooms but don't rent out the second bedroom?

The reason I ask is that I want to help my niece to have a stable place to live but the available property has two bedrooms. She's on universal credit. I could either pay 12 months up front, as she's finding it difficult to get a tenancy once they find out she's on benefits and not working. Or potentially I could buy a place on a btl mortgage and rent it to her. But if it has two bedrooms would that cause a problem for her benefits?

She is suffering very badly with her mental health. I don't think sharing would be an option for her at the moment.

I would be massively grateful if anyone could give me any pointers.

It affects the alount of housing benefit she gets.

So say the allowance for a single person is £50 a week and the 2bed is charging £75, she wouldn't get the full amount and would have to cover it herself.

So assuming you're financially providing support, you could just cover the shortfall

Its very difficult to rent to family your contract has to be iron clad you must be prepared to evict them and they will not get more than they are entitled to in rent so for example under a certain age no children have shared room rate only that is the maximum they will pay you can charge (for example)£800 a month rent but if her maximum local housing allowance is only £400 then £400 is a she will get

Private rent
If you rent privately, your eligible rent amount is either your Local Housing Allowance (LHA) rate or your actual rent, whichever is lower. The LHA rate is based on:

where you live
your household size - find out how many bedrooms you’re eligible for

That's it, the LHA rate. Varies by area so you'd need to check. On the above scenario she'd only get £50 so would pay £25 herself.

I think there might also be issued with getting the HB element if you're renting off family...

... work look I think if you buy it and rent it to her, it has to be done formally with a proper contact etc, as if you were renting to anyone else

Thanks so much for your responses Sleeping and Slippery,

Interesting that we could cover the shortfall. Her grandmother wants to help so she would probably be happy to do that.

Slippery I understand about renting the family and possible future fallout. This is definitely something to be kept in mind but for various reasons I'm not so worried about that at the moment.

SLeeping it would actually be a property company that would buy the flat, we are part-owners of that company, so I don't think the family aspect would impact.

Look into contrived tenancy.

The other thing is universal credit are cracking down on family renters so even though your half owners in the company it probably still needs declaring and paying the extra yourselves might be counted as her income

Its a minefield

You've got to be careful with financially supporting her too. They can be funny about regular financial contributions from family because it's technically income. So no paper trail ;)

@dontknowmuchaboutbenefits

SLeeping it would actually be a property company that would buy the flat, we are part-owners of that company, so I don't think the family aspect would impact.

Well it would Def be a formal contract then and they probably are well aware of the rules etc you'd need to follow.

Re the money then, if she pays any shortfall from her benefits, would her family be able to help by doing a to weekly for shop instead say for the equivalent amount? Then it's not £300 going into her account every month / DD for the rent from Grans account?

Is your niece under 35?

How serious are her mental health issues? Are they long-term and do they have a significant impact on her day-to-day life eg preventing her from washing, dressing, cooking, leaving the house? Depending on the severity, she might be eligible for PIP. This is relevant because it can affect other benefits including the amount of help she would get with rent.

Assuming she is under 35, and not getting PIP, she would be entitled to the LHA (Local Housing Allowance) rate for shared accommodation, which is the lowest rate and will be well below the market rent for a 2 bedroom property. If she is 35 or older and/or getting PIP, she would get the LHA rate for a 1 bedroom property. She wouldn't get the 2 bedroom rate unless she was on PIP and needed an overnight carer (unlikely for MH issues).

She will get the housing element even though she's family because she won't be living with you and you'll have a tenancy agreement so should all be above board, she'll just need to explain the situation to her work coach and provide a copy of the tenancy agreement. The LHA won't cover her rent, though, unless you charge well below market rates.

Oh and financial support from family is not counted as income because it's discretionary and can be withdrawn at any time. She should still declare all income and savings though (and be aware that contributions from family that take her savings above £6k will affect her means-tested benefits).

Sleeping, that's a good idea re paying for shopping.

Brilliant information, AnotherEmma, thanks so much. Niece is under 35 and currently getting help for her mental health. I know she has had interviews regarding benefits in this regard but I'm not absolutely sure what the result was. She is a lovely person and very gentle, she is just struggling a bit at the moment and having a stable home would give her a chance to get to a better place.

So, as a house purchase is a longer-term goal I think for the moment I need to focus on getting her a rental.

I'm assuming if I pay her rent up front (understanding there will be a shortfall in what she pays me) then that won't adversely affect her benefits will it?

There’s something on martins money tips website about not paying council tax if someone has severe mental health issues. That might be worth looking at.

And see if you can get the housing benefit element of her benefits money paid directly to you/the rental company so she doesn’t accidentally spend it thinking it’s hers when it’s in her bank, as not for spending it for the house. I’ve heard of that causing massive debts and people being made homemade.

"I'm assuming if I pay her rent up front (understanding there will be a shortfall in what she pays me) then that won't adversely affect her benefits will it?"

In order to claim the housing element of UC, she will have to provide a copy of the tenancy agreement showing the rent that she is liable to pay. If the tenancy agreement says that she has to pay a year's rent up front, I'm not sure how that will work with UC, as UC is obviously paid monthly, and most people on UC wouldn't be able to afford it and wouldn't have a kind relative paying it for them. I suppose she might still be able to claim the housing element and then use it to pay you back for the year's rent advance. She would need to declare the arrangement though, I think.

Do you think she could get a tenancy with monthly rent payments if you agreed to be guarantor? Would you be happy to do that?

Shelter has some good advice on their website about finding a private rental when you're claiming benefits. And it's worth her contacting her local council as the housing advice team might be able to point her in the direction of local landlords that accept benefits. My local council has a lettings agency for people who can't get social housing (not eligible) but still need a bit of help to get a private rental. So it's worth asking the council what help they can offer.

@Elieza

There’s something on martins money tips website about not paying council tax if someone has severe mental health issues. That might be worth looking at.

People with a "severe mental impairment" are disregarded for council tax purposes but that won't apply in this case. It's for things like dementia and you need medical evidence.

However, if she lives alone she'll be eligible for the 25% single person discount. And if she's on Universal Credit she'll be eligible for Council Tax Reduction (also called Council Tax Support) which will cover some or all of the remaining 75%. Depends if she has any other income or is just on UC.

Re rent op I think the best option is for her to pay the full amount, you be her guarantor and then you / gran provide whatever extraoney you're happy to give but in kind - pay a bill, but food etc.
If you pay a year up front and she hates it, you're screwed. And as pp said, it might be awkward with benefits.

I think lots of places would take her of she has a solid guarantor

Thanks so much for these responses. I've been thinking it through and discussing wtih niece and her grandmother and agree with you sleepingstandingup that the only option is guarantor and then a bit of financial support to top it up.

Now I just have to find a flat with a garden that allows her dog :)