Is this ok?

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  • Is this ok?

    I am looking into becoming a buy to let landlord.my step daughter suggested she move into the property and housing benefit will pay the rent,she has been on housing benefit for three years and hasn't lived with me and her mum for five.is this viable and legal?any advice most welcome.

  • #2
    Hi,
    I'm not too sure as we're new to this ourselves but I think it would be dependant on the mortgage company you use. I know ours - Birmingham Midshires - doesn't allow us to rent to family. Maybe that's something to look into if you are planning to mortgage the property.
    Adrienne

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    • #3
      As long as the tenancy is on a commercial basis (proper agreement, normal clauses, you'd let to someone else if she moved/didnt want it after all, youd take proceedings if she didnt pay the rent etc etc) AND she declares the relationship when she claims there shouldnt be much of a problem with her benefit claim (her claim, not yours remember)

      housing benefit will pay the rent,
      ROLF. Will they? She still has to make a claim. Check the LHA rate. If the benefit she would get is less than you intend charging, she'll still have to pay the difference or it will be regarded as non-commercial. If she also "forgets" to declare the relationship, and this fact surfaces later on, the claim will immediately be regarded as suspect, even if its all above board.

      From a non-benefits perspective many landlords on this forum advise against renting to family as it almost always goes pear-shaped and causes disagreements.
      The above is my opinion only and does not represent a response from my employers.

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      • #4
        The council will take a dim view of installing your daughter into
        property you own.
        You must contact the council, for them to tell you if they will
        pay rent to her father.

        R.a.M.

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        • #5
          her mother and i are not married,and i will be the sole owner of the property,does this affect anything?

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          • #6
            Originally posted by Sheenus View Post
            her mother and i are not married,and i will be the sole owner of the property,does this affect anything?
            see post number 4

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            • #7
              Please do some research on "contrived tenancies". It is perfectly possible to do what you want to do, but you have to understand the rules and play by them. Your step-daughters housing benefit will be under additional scrutiny to ensure there is no attempt to defraud the authority, and this means her application may be considerably delayed. Annoying for her, but the checks are in place to protect the council-tax payer.

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              • #8
                Originally posted by ram View Post
                The council will take a dim view of installing your daughter into
                property you own.
                You must contact the council, for them to tell you if they will
                pay rent to her father.

                R.a.M.
                You are wrong.
                Allow tenants to protect their own deposits. I want free money when they do it wrong

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                • #9
                  i asked my stepdaughter to call the council and explain exactly the situation for my own peace of mind,she was told there is no problem whatsoever as long as i dont live there aswell.i have asked for this in writing to file away.so all seems ok.

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                  • #10
                    Originally posted by thesaint View Post
                    You are wrong.
                    If my post number 4 is wrong, then so is post 7 wrong also
                    We both said in essence, to beware, the council may not be
                    comfortable with the situation.

                    Is it WRONG to advise that a council maynot like a certain situation ?
                    Or should we say -we dont know anything about your council
                    whatsoever, but there will be no problem whatsoever with your
                    council that we have never talked to ?

                    Thanks.

                    Comment


                    • #11
                      Sheenus,

                      If you look back some of my earlier posts, or my website articles like: http://www.hbadvice.co.uk/articles/Y...e_November.pdf you'll find this issue is a bit of an old chestnut. Some councils do have something of a mindset when dealing with tenancies/liabilities involving family members, frequently denying benefit wrongly. There is nothing illegal or improper in claiming Housing Benefit to assist the tenant (your relative) meet their contractual rental obligations. But where family members are involved councils must examine the relationship closely to ensure: firstly, there's a libilty; secondly, the liability has been created on a commercial basis; and thirdly hasn't been created simply to abuse the HB scheme.

                      Demonstrating a liability exists is relatively straightforward, especially where an AST has been created between the parties, including a rental charge which is "commercial" i.e. comparable with the market rent for that size of property in your area. Have a read at a recent Upper Tribunal case I dealt with: http://www.hbadvice.co.uk/articles/U...H_McArthur.pdf.

                      Most difficulties arise when trying to demonstrate the arrangement is "commercial". Problems occur when family members download an AST from a website and fail to record details of the rent; including rent frequency; fail to set up formal & transparent payment arrangements; fail to pursue significant rent arrears etc. I dealt wih one case recently where the mother (the tenant) was asked to examine the AST and she didn't know what it represented or how much she was due to pay her daughter monthly.

                      My advice to clients thinking of renting to a mother/father or daughter/son is to ask an estate or Letting Agent to handle all the formalities, including the terms of the AST, amount of rent due, collection of rent payments and the associated pursuit of the debt when the tenant defaults. This way the chances of receiving payment of HB rise considerably.

                      HBadvocacy
                      www.hbadvice.co.uk

                      Comment


                      • #12
                        Originally posted by ram View Post
                        If my post number 4 is wrong, then so is post 7 wrong also
                        We both said in essence, to beware, the council may not be
                        comfortable with the situation.

                        Is it WRONG to advise that a council maynot like a certain situation ?
                        Or should we say -we dont know anything about your council
                        whatsoever, but there will be no problem whatsoever with your
                        council that we have never talked to ?

                        Thanks.
                        Post#7 is fine.
                        Allow tenants to protect their own deposits. I want free money when they do it wrong

                        Comment

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