Renting from a family member and the hb element of UC...please help me

[lidlbitupset]

Hi, my niece was unable to rent anywhere to live. We tried lots of different ways to help and support her but we cannot act guarantors as we have no salaries. Also she has a dog, doesn't work and has quite severe mental health problems, including several hospital stays a year. It was impossible. We bought her a house and she said she could claim housing benefit and give it to us. She signed a shorthold tenancy agreement and has been sending us the lower amount but has applied for the full amount. Now the council have looked at her bank account they have seen a payment from her grandmother, my MIL, with the same name and are now questioning the family connection. They ahve sent her a form to fill in. The main problem I can see is that the house is rented to her at below market rent and also that I didn't bother taking a deposit and putting it in a scheme. I can of course do that now but the certificate will obviously show the date. Can anyone advise? We are not trying to claim unfairly, just help her...

Sure and then set it up as a business, putting deposits in schemes and so on. Housing OP's niece (or the children of the parents which was the example given) is not a business and doesn't pay interest like savings in a bank. My heart ain't gonna bleed for someone with 200k to buy a house outright and wanting it paying back from the state if they don't operate like a proper landlord, If OP does - as later reply implies they will by filling in the form honestly - then fair enough. But my argument isn't bamboozling. OP bought the house for her niece. Either it's a good deed or her niece is a legit tenant and it's all above board. There shouldn't be - I bought this for her and it's all super lax but pay me back, everyone else.

Are you saying she is paid the highest amount of housing benefit according to your LHA rates, but that you only actually have an agreement and she only pays half that and let her keep the other half of her housing benefit? That’s benefit fraud. She could have more problems than having her housing benefit reduced to her actual housing costs or having the housing benefit fully stopped. . If market rent is say £800 but you agreed to only charge her £400 and she’s just been keeping the extra £400, she’s will likely have to pay everything she’s falsely claimed back. If you’ve known this is what’s been happening and have been part of the planning to set things up that way, you might be in trouble yourself.

The claimant has to declare if they are renting from a family member when making the application, was that answered truthfully?

Charging less than market rent is a huge red flag, and could trigger investigations into this being a contrived tenancy.

I work in this area, this has got contrived tenancy written all over it. Did your niece pay a deposit? Rent in advance? The fact it's below market rent is a big red flag. Be aware that if housing element has already been claimed, there could be a recoverable overpayment.

I rent off my aunt. The rent is significantly lower than market rate. She does tge gas safety check, electric safety check and the house is registered with the local authority as a rental. I declared that my aunty own the house on the UC application. The house was rented as an HOA prior to us moving in and it was trashed. She rented it to me because sgw knew I would look after it.

The difference here is that the property was previously rented out to other people not purposefully bought to rent out to family. I think this could make a difference as to whether it's viewed as a contrived tenancy.

That has nothing to do with it, many landlords have paid off their mortgages and get more profit but the UC is based on the needs of the tenants.

She would have to prove it is a commercial rental agreement, but she is charging below market rent, and also did not take a deposit or put it in a scheme.

Like a PP said, it has contrived all over it.

Reeks of benefit fraud this if she is claiming more than she pays you in rent

There are two major issues. That she didn’t declare the link when applying and that she’s been claiming one amount and paying you a smaller amount.

Your niece would be well advised to get herself
proper legal advice before speaking to them. Claiming more than her rent is something that could get her in far more trouble than them just saying they’ll no longer pay the rent.

Contrived tenancies is something many councils have got much hotter on. It took them 5 months to make a decision when my cousin was renting from me and that was in a situation where it was declared as soon as we realised (I was taken to live with my grandparents when I was 7 due to parental abuse and hadn’t seen my cousin since and was unaware of her married name), the property had been rented out multiple times before her and we were introduced by a council scheme after my previous tenant got a council property!

I’m so glad my taxpayer £££ are going towards paying for your daughter to live in a house you own and can afford to rent to her as long as I pay for it. Fabulous.

Baffling isn't it. Anyone could buy a house to rent to their relative knowing the rent would be covered by benefits and then that relative could inherit the house ! I'm missing a trick here.

She isn't.

You literally said she’s been paying you the smaller amount, but claimed the higher rate.
That is benefit fraud.

Your niece needs proper legal advice before she has her meeting with UC. She could be in a lot of trouble.

Where do you think that the OP said that? I'm seeing that the OP said that her relative pays less than market rates for rent but not that she falsely claims that she pays higher rent.

She has been receiving the lower amount and paying that same amount to me.

I would genuinely like to ask how people would help an adult member of their extended family who is massively struggling with housing themselves while in a mental and physical health crisis with a dog in an area with very little suitable housing let alone ones accepting benefits. We have offered it to her for what she can afford, no point asking for more as she can't pay more. She is entitled to the housing element of her benefits and has always claimed it and she is also outside the degree of co-sanguinity required in the rules.

I wonder if posters are deliberately seeding misinformation in the hope it sticks.

@lidlbitupset try and ignore the judgemental stuff.

Have UC yet had the information about the tenancy they've asked for and have they decided whether or not they will pay Housing Costs?

If she's under 35 LHA might be limited to the shared accom rate i.e. the rent for a room in a shared house. However if she's on PIP for Daily Living she should get the one bed self contained rate. My advice would be to set the rent to match that.

It’s in the op. This part, it made it sound she had told UC that her rent is twice the amount than it actually is in order to claim the maximum amount of housing benefit. Even though op herself says she charges half the market rate. Why would she apply for the full amount of market rate housing benefit if her actual rent is half that. They’ll ask her neice why she would have chose to do that.

She signed a shorthold tenancy agreement and has been sending us the lower amount but has applied for the full amount.

Her niece is in a two bed house, so I assumed the 'lower rate' refers to her only getting housing element to cover one bed. I don't think she will get more UC to cover the market rent for a two bed place (that would be the 'bedroom tax').

That’s not how your OP reads at all with your comment about her paying the lower amount but claiming the full amount.

Any renting from a family member needs to be declared. There’s no level of relative where it’s ok not to declare it.

@lidlbitupset - what do you mean by 'the lower amount'? What is the higher amount your niece is applying for? I think that is what is causing confusion here.

Unfortunately if you rent off a family member it has to be treated like a proper landlord/tenant relationship highly likely she will need to repay it back to dwp.