Family member landlord and universal Credits

Emmav2020 · 2022-08-10T07:54:26+00:00

Hey, So im moving from a 2 bed flat that is managed by Trading places into my parents 2nd home they are renting out. my grandma died during covid and left the house to my dad so hes done it up and now renting it to myself. Ive got 2 kids (12yo and 10 months) so im going to be paying £700 a month to my parents. Does anyone know what i will need to write on the letter from my dad to UC with my situation on? TIA x

Mrsjayy · 10/08/2022 08:59

You can't pay housing benefit/universal credit to close family members you will need to inform them you are now living in property owned by family that is what your letter must say.

The4teddybears · 10/08/2022 09:10

You can get uc housing costs paid in these circumstances. They just might need to check it’s a fair rent for the property and the area .
I had a friend who lived in the father in laws house and had HB paid. HB knew and checked it wasn’t a “contrived tenancy”.

The4teddybears · 10/08/2022 09:16

To clarify above post. Father in law owned the house and she rented off him. He did not live there. She had a proper tenancy agreement

JustALittleHelpPlease · 10/08/2022 09:21

Yes a proper tenancy agreement is needed. If they are difficult about het it let to you through an agent. They just need to know hou are paying the rent you state to the person you are supposed to be and not getting it back in kind (e.g. they pay your bills for you ir something)

RainyDays22 · 10/08/2022 09:21

Your dad needs to be a registered landlord with all the correct insurances etc.
you can't just rent and have a letter, doesn't work like that.

Original poster

Emmav2020 · 10/08/2022 10:29

thanks for getting back to me. my dads got a buy to let mortgage on it as he had to spend over £100k on the house before it was able to be lived in and now its done im moving in as i need more space. will a letter with all the information on saying its owned by him and i will be paying rent and all the bills and i will have proof of payments each month, will that be enough?

OP posts:

MagneticRubberDucks · 10/08/2022 14:01

Emmav2020 · 10/08/2022 10:29

thanks for getting back to me. my dads got a buy to let mortgage on it as he had to spend over £100k on the house before it was able to be lived in and now its done im moving in as i need more space. will a letter with all the information on saying its owned by him and i will be paying rent and all the bills and i will have proof of payments each month, will that be enough?

No a letter won’t be enough.

you need a proper short hold assured tenancy agreement,
the rent will need to be at the ‘market rent’ for the area,
they will check that he is registered as a landlord, filed to pay tax on the rental income, has landlord insurance, building’s insurance etc

basically they want proof that it is all done completely as though you are strangers and not family,
they want to see that it’s completely above board and if you don’t pay the rent he will be willing to evict you etc

they will check throughly.

Sprogonthetyne · 10/08/2022 14:15

A letter won't be enough, your dad will need to be treating the tenancy exactly the same as if he was renting to a stranger. You'll need;

Tenancy agreement- you can find templates online

Charge market rent - you can get a letting agent to do a rental valuation, it's usually free as they want you to rent through them

Landlord insurance- you can buy online for couple of hundred a year

Gas/electricity certificate

Declaring income on tax return

Some of these will also be conditions of his mortgage anyway, or would be required even if you weren't claiming. He should be able to sort it out himself if he can put a couple of days into looking everything up.

Onandupw · 10/08/2022 14:18

You’ll need a standard rental agreement and your father will need to do all the normal landlord things - gas safety etc. this information is available from national landlords association. But might be easier just to get a letting agent to do the set up and then he can manage going forward

Babyroobs · 10/08/2022 15:39

As others have said you need a proper tenancy agreement. ideally he needs to have rented it out before otherwise it could be seen as a contrived tenancy but obviously it wasn't rented before so he can't do that. It may have to go to a Uc decision maker. You can't just send them a letter and hope all is ok it doesn't work like that.

Original poster

Emmav2020 · 10/08/2022 15:57

So basically my dad wont be earning of it. he had to get a loan to do the work on the house and im moving in with my 2 kids and my rent is the price of the loan. I have just done a tenancy agreement template now for us both to sign. hes also got all the certificate for everything aswell so hoping this is enough. x

OP posts:

KenAddams · 10/08/2022 15:59

Hi... are you in Scotland?

Mrsjayy · 10/08/2022 16:00

It doesn't matter where your rent is going your dad is still landlord and he needs to register as such and if you are getting benefits then you might not get them paid as part of housing benefit because it would be your father that is benefiting.

NoSquirrels · 10/08/2022 16:01

I’m not sure that will be enough.

What’s the going rate of rent for that size of property in your area?

Your dad needs to be really careful with his BTL mortgage too. Usually you’re not allowed to rent to close family members.
(I’m a LL)

NoSquirrels · 10/08/2022 16:09

commonslibrary.parliament.uk/benefit-support-for-housing-costs-when-renting-from-relatives/

Make sure you and your dad look through the link above. Is the £700 rent more or less than the tenancy you’re giving up? That might be very relevant.

Horoscopegubbins · 10/08/2022 16:20

But even if your dad is using the money to pay back the loan, the money is still benefitting him because he's using the loan to improve his asset.

Babyroobs · 10/08/2022 17:09

I personally find it bizarre that people can claim rent money to pay for a property that they will one day probably or likely to inherit a share of themselves ! . Yes I know that people will say that if the dad wasn't receiving it then another landlord would or if op wasn't renting it then someone else would be, but I just find it really hard to get my head around it being allowed. maybe someone else can help me see it a different way ?

Mrsjayy · 10/08/2022 17:46

Babyroobs · 10/08/2022 17:09

I personally find it bizarre that people can claim rent money to pay for a property that they will one day probably or likely to inherit a share of themselves ! . Yes I know that people will say that if the dad wasn't receiving it then another landlord would or if op wasn't renting it then someone else would be, but I just find it really hard to get my head around it being allowed. maybe someone else can help me see it a different way ?

They can't though that is what posters are trying to tell the op she can't use benefits to pay her dads rent,

Mrsjayy · 10/08/2022 17:47

Pay rent to her dad *

WestIsWest · 10/08/2022 17:50

Mrsjayy · 10/08/2022 17:47

Pay rent to her dad *

I have a friend who did this. Proper tenancy, gas safety checks done etc. etc. It took a while to sort but they did get there eventually.

NoSquirrels · 10/08/2022 17:55

Babyroobs · 10/08/2022 17:09

I personally find it bizarre that people can claim rent money to pay for a property that they will one day probably or likely to inherit a share of themselves ! . Yes I know that people will say that if the dad wasn't receiving it then another landlord would or if op wasn't renting it then someone else would be, but I just find it really hard to get my head around it being allowed. maybe someone else can help me see it a different way ?

This is exactly why it’s difficult to receive housing/rental benefits if you rent from family. It’s why there are restrictions.

You can do it, as said, but you have to prove a) it’s a legitimate tenancy, b) no one is profiting off it unduly e.g. it’s at a commercial market rent c) the tenancy wasn’t only created to house this family member & that family member didn’t have other viable or more cost effective options (this could be a problem for OP) and d) that the family member will act as another LL would e.g. eviction, maintenance & upkeep etc.

It’s tricky for all the reasons you state.

I can see why OP and her dad think it’s a good plan - I looked into it for my MIL at one point - but the restrictions make it hard.

I’d hate OP to give up a secure tenancy without being 100% sure that she’ll still get her benefits paid.

MissMaple82 · 10/08/2022 17:59

You need a legitimate tenancy agreement and only a tenancy agreement will do. A letter won't cut it

Babyroobs · 10/08/2022 18:46

NoSquirrels · 10/08/2022 17:55

This is exactly why it’s difficult to receive housing/rental benefits if you rent from family. It’s why there are restrictions.

You can do it, as said, but you have to prove a) it’s a legitimate tenancy, b) no one is profiting off it unduly e.g. it’s at a commercial market rent c) the tenancy wasn’t only created to house this family member & that family member didn’t have other viable or more cost effective options (this could be a problem for OP) and d) that the family member will act as another LL would e.g. eviction, maintenance & upkeep etc.

It’s tricky for all the reasons you state.

I can see why OP and her dad think it’s a good plan - I looked into it for my MIL at one point - but the restrictions make it hard.

I’d hate OP to give up a secure tenancy without being 100% sure that she’ll still get her benefits paid.

Show quote history

People do it all the time though. I work in benefits advice and people are always renting from family.

MagneticRubberDucks · 10/08/2022 19:13

Emmav2020 · 10/08/2022 15:57

So basically my dad wont be earning of it. he had to get a loan to do the work on the house and im moving in with my 2 kids and my rent is the price of the loan. I have just done a tenancy agreement template now for us both to sign. hes also got all the certificate for everything aswell so hoping this is enough. x

I work in this area.

unless you meet every requirement exactly your claim will definitely be refused.

they are so strict on this you need to be very through and tick every single box.

you need a proper legal assured short hold tenancy agreement.

you need to look at what the market rate for rent is in the area for properties of that size and the rent must fall within a certain threshold, usually it’s 10-15%.
it can not just be the cost of the mortgage/loan if that falls significantly below the market rate as that will trigger something that will immediately reject the claim.

there must be all the appropriate certificates, gas, energy efficiency, electrics. Etc.
and landlord and buildings insurance.

and most importantly you dad must be registered to do a self assessment tax return for the rental income, because even if he is making £0 profit and it’s all going on the loan/mortgage he will still have to pay tax on the rental income.

this is something they check 100% of the time as it’s the biggest indicator that the tenancy is not 100% above board.
They will also check when they do the annual review that it is being declared appropriately,
And if it isn’t they can decide you claimed fraudulently and come after you for all the money back.

ImWell · 10/08/2022 23:55

The4teddybears · 10/08/2022 09:10

You can get uc housing costs paid in these circumstances. They just might need to check it’s a fair rent for the property and the area .
I had a friend who lived in the father in laws house and had HB paid. HB knew and checked it wasn’t a “contrived tenancy”.

Possibly, but unlikely. It may well be viewed as a contrived tenancy, in which case nothing will be payable.

One of the considerations is whether her father would really kick her out if she stopped paying rent. The view may be that it’s more of a favour for a family than a commercial agreement.