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...

If she wants to claim rent as a legitimate tenant then she needs to actually be one, so you need to do all the legal things landlords have to do, like taking and protecting a deposit, having the appropriate insurance and gas safety certificates etc. it doesn’t sound like you have done all that? If you are just a family member casually letting her live there for a bit of money to help her out then she’s not renting from a landlord and isn’t entitled to help with rent.

@ToKittyornottoKitty , I have done all these things (i have other rental properties), the only thing I haven't done is charge market rent.

The fact that you "bought her a house" may mean it is a contrived tenancy. Info here:
www.housingrights.org.uk/professionals/news/universal-credit-decisions-contrived-tenancies

Oh you said you haven’t taken a deposit and put it in a scheme though, which would suggest you’ve not done all the legal things.

No, with the posters finances it's one of uc business, they just need to know theres a lease etc, the poster clearly has own money, maybe retired even. Uc just need to know cost of rent and it should be around market value BUT uc only give a certain amount a month for rent, I suspect the issue is the relative sticking cash in claimants account you have to account for every penny paid in to your bank when asked, it's meant to stop people working on the side.

Your OP says that you didn’t take a protected deposit.

You seem to be rather changing things as the thread progresses.

Also if you have other properties and are an experienced landlord why would you a) not realise she has to declare any relation to the landlord and b ) ask for help on mumsnet rather than one of the landlord forums?

I would love it if someone actually suggested how they would help in this scenario.

@ToKittyornottoKitty it is now.

You've not done all those things. From your own post: I didn't bother taking a deposit and putting it in a scheme. Not sure about the others things, whether she declared it etc.

But in answer to what you can do to help an adult family member struggling with their housing, most people wouldn't have the ability to do your solution and the adult would have to live with them (and forgo hb) or they'd have to do the rental thing by the rules and see if the hb was allowed or if it was deemed a contrived tenancy as you bought it for her rather than letting her live in one of your existing rental properties which would have been more straightforward. If the hb isn't ultimately okayed when they have the full info, I guess you'd have to stand by letting her have it for what she can afford even if that's nothing. You could let the other room out if you really need the income and then that would help with it looking more legit as a rental and maybe hb would be granted in future. But again, you have to treat this like a proper rental set-up as you have with your properties presumably, not act like you're naive about this, which you can't be as a pro landlord, and like should be reimbursed for buying your niece a house.

Help with which aspect? Are you helping her prove you are a legitimate landlord? Or are you wondering if you should keep charging her rent?

All you can do is see what the decision maker at the DWP decides.
If the tenancy is seen as contrived, both you are your niece are going to be in trouble and owe money.

Stop changing your story you already said you didn’t take a deposit.

At this point - by getting your niece very decent legal advice.

in the beginning - not having a contrived tenancy (especially as an experienced landlord) and declaring the connection right away

It’s likely only the niece will be in trouble, and if the money was paid to her she’ll be solely responsible for the repayment if they decide she wasn’t entitled.

Even though the OP was involved she didn’t sign any UC forms. This is one of the reasons benefit claims are often a tactic in abusive relationships (not suggesting the OP is abusive in any way) as ultimately only the person who signs the claim will carry the can.

As long as the OP hasn’t breached any legal obligations such as gas certs and declared the income they’ll have no comeback other then potentially a niece not able to claim for housing.

Did you get legal advice before suddenly taking and protecting a deposit?

Doing it after UC flagged an issue looks even worse than not taking it in the beginning.

Lower amount than what? Either you rent at full market value and she pays difference to her housing allowance entitlement (which as a single young person is often based on a house share) or you are only charging her what she can claim which is contrived. You may think you have helped her but it is likely to call her whole claim into question.

@pinkdelight , but your suggestion is exactly what I'm doing, Im giving it to her at what she can afford, and if they say no they say no.

The deposit in an insurance scheme.

Yeah, I don't understand the benefits system. But anyway, if she is asked to repay we will. we did this several years ago and I did the paperwork and declared the connection. Not sure why I wasn't involved this time.

It's not a legal requirement for landlords to take a deposit though is it? Whereas gas certificate etc are legally required.

So what more help do you expect? You're doing what you're doing - albeit changing your story so that now you are attempting to do it properly when that wasn't the case before - and you're in the hands of the system and will see what gives and let her stay there anyway whatever the outcome so that's all grand. There isn't some other suggestion anyone here's gonna make which means she gets hb for a contrived tenancy and all is well. Do things properly and wait n see.

No but it's a big red flag that draws suspicion that all is not above board. It's the fifth bullet on this list for deciding if tenancy abuse exists, and some of the other bullets will be flags too, like it not being through an agent, not renting it out before and the action that would be taken if the tenant didn't pay the rent. The fact OP would let her stay there anyway says a lot - it's v kind of OP but also very cake and eat it. Either let your niece stay in the house you got for her, or have a proper rental set-up. This inbetweeny stuff is what causes the issues.
https://data.parliament.uk/DepositedPapers/Files/DEP2025-0769/050_Contrived_tenanciesGuidance_V6.pdf

It’s not.

However, not taking one is unusual so would need explained. In conjunction with lower than market rent it looks like a tenancy that isn’t genuine. Especially if the OP’s other tenants all pay market rent and have protected deposits from the beginning.

Not taking one at the start of the tenancy, then taking one at the point it’s been looked into doesn’t help the case against a contrived tenancy, it adds to it.

im confused about her claiming a higher amount j it giving you a lower amount. So she's making money out of it? The whole thing sounds like a scam.

OP seems to ignore any questions about that.

Bedroom tax isn’t over half the market rate though. If market rate for a two bed house is £800, UC don’t deduct over half of that from housing element, it’s a certain percentage, and the “tenant” is expected to make up the shortfall.

However, op says she charges less than half market rate, and that she plans to get the full market rate from a second tenant, but won’t allow that for a year while her neice recovers, if the tenancy agreement reflects that it’s a house share and her neice is only being charged rent for one room, then the “full amount” op mentions in the op still doesn’t add up.

If the niece also gets any type of disability element to her UC or PIP. The bedroom tax may not apply. Sometimes it doesn’t depending on circumstances.

But OP wont clarify what she means by the lower and higher rates.