Help Needed - Contrived Tennancy

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Help Needed - Contrived Tennancy

    Hi All,

    Some advice would be appreciated. Basically my parents were in trouble financially and stopped paying there mortgage. House is worth currently around 130K with a mortgage of 35K.

    They didn't tell me until the last minute when the house was due to be repossessed. They have started claiming benefits due to health but they benefits office wouldn't not pay towards the mortgage which is fair enough. I have paid off the mortgage in full using savings and a large loan.

    I guess my questions Is can they sign the house over to me and I rent it out to them and HB pay for it? or is that classed as a contrived tenancy even although the costs would go to paying off the loan I have had to take out.

    before everyone kicks off, I don't want to commit benefits fraud nor has this been planned but its more whether I can make the situation work so I am not out of pocket.

    Thanks in advance.

    #2
    So you've paid off a £35k mortgage and you want them to sign the £130K house over to you, giving you a tidy £95K profit.

    That would hardly be "out of pocket" in any circumstances.

    And (after 'stealing' £95k from them), you also expect your parents to pay you rent to live there?

    And yes what you propose with benefits would be seen as a contrived tenancy, and fraudulent,

    As well as that transfering the property would be seen as "Deprivation of Capital with a view to claiming or increasing benefits" on the part of your parents.
    You can't just give away assets so that you can then claim (more) benefits.
    They would be treated as still having the value of the property as 'Notional Capital' - which would stop payment of any and all Income Related benefits they may be claiming.

    What they should have done was apply for a SMI loan from the DWP.
    https://www.gov.uk/support-for-mortgage-interest

    If that was not possible then their option would be to sell the property, pay off the outstanding motgage, and buy a smaller property with what was left.

    In fact that's probably what should happen now if you want your money back quickly, they have merely swapped you for their mortgage lender.

    PS. Unless one of them has the Severe Disability Premium in payment then they could not claim Housing Benefit anyway - it would have to be Universal Credit.

    Comment


      #3
      Bit by bit.

      Your parents can't just "sign" the property over to you.
      It's a legal transaction, just like any other house sale and purchase.

      You would need permission from the local authority to let a property to your parents.
      If it's done at a discount and you are up front about it, they might say yes.
      If you don't tell them and the local authority find out about it, they might demand all of the benefit paid to be repaid.

      If you do let it to your parents it will be difficult to mortgage it as a BTL.

      You could see if the property could be the subject of an equity release mortgage with your parents.
      That might free up enough money so that they could repay you and then they wouldn't need housing benefit.
      But it does mean the property isn't part of their estate for you to inherit later on.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        As stated above, the benefit system is for those who have not much, your parents effectively have the equity between their original debt (which as a son you assisted with) and the value of the house, so they don't (or should not need) assistance from the state.

        Comment


          #5
          Yes this would be clear benefits fraud -- which you say you have no intention of committing. Parents have a £95K asset (after mortgage) they need to sell to fund their living expenses. Giving it to you so that I have to pay for them to live (whilst paying my own expenses as well) is a damn cheek - fraud and crookery.

          Comment


            #6
            You're basically trying to get the state to pay you back for the loan or gift you made to your parents in paying off their mortgage. I can't see it getting through the contrived tenancy rules either.

            Comment


              #7
              Your parents would definitely fall foul of Regulation 9(1)(h)

              Regulation 9 Circumstances in which a person is to be treated as not liable to make payments in respect of a dwelling

              (1)A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where—

              (h)he previously owned, or his partner previously owned, the dwelling in respect of which the liability arises and less than five years have elapsed since he or, as the case may be, his partner, ceased to own the property, save that this sub-paragraph shall not apply where he satisfies the appropriate authority that he or his partner could not have continued to occupy that dwelling without relinquishing ownership;

              Also sale and rent back schemes (which is what you are effectively saying) are very strict and are FCA regulated.

              https://www.citizensadvice.org.uk/de...-back-schemes/

              Comment


                #8
                Originally posted by nukecad View Post
                So you've paid off a £35k mortgage and you want them to sign the £130K house over to you, giving you a tidy £95K profit.

                That would hardly be "out of pocket" in any circumstances.

                And (after 'stealing' £95k from them), you also expect your parents to pay you rent to live there?
                It is amazing what some people read into posts without waiting for the answer to a few simple questions.

                An equally possible interpretation, and the one which occurred to me on a single reading was this:

                The OP learns his parents are about to be made homeless and to prevent that steps in and pays off the mortgage not only using his savings but taking out a loan. He is £35k down with no savings and a loan to pay off. He is probably going to inherit the property in due course. His question is: If my parents advance the inheritance and give me the property and I charge them rent is it a contrived tenancy? He is exploring his options and is just asking the question.

                Comment


                  #9
                  Originally posted by Lawcruncher View Post
                  It is amazing what some people read into posts without waiting for the answer to a few simple questions.
                  Sorry Lawcruncher but I read just what is there, and responded to what had been written, (as it seems have others).

                  House is worth currently around 130K with a mortgage of 35K.

                  I have paid off the mortgage in full using savings and a large loan.

                  ...can they sign the house over to me..
                  There was no mention of buying the house at a reduced price to take account of what had been paid off, simply 'sign it over'.

                  I had considered whether the OP may eventually inherit the property at some time in the future, but it was never mentioned.
                  We don't know if there is a will, any siblings who may also inherit a share of the property, or whatever.

                  It was the assumption that they would just 'sign it over', and then pay rent for a property they had gifted, that rankled for me.

                  If the OP had intended to pay them for the property then they would have that money as capital and would not be able to claim benefits anyway.

                  TBH The benefits question was secondary, as well as being pretty obvious. Although the OP probably hadn't considered the 'Deprivatation' angle.

                  Yes, the OP has helped their parents out when they were in a financial hole, most people would if the have the means.
                  But most people wouldn't expect to get their parents home gifted to them for helping.

                  As for waiting for 'the answer to a few simple questions' the only question that had been asked at the time was the OP's about the possibility of claiming benefits.

                  Comment


                    #10
                    Originally posted by Hudson01 View Post
                    As stated above, the benefit system is for those who have not much, .................
                    Ummm ... not always:

                    State pension, PiP, DLA, winter fuel, Xmas bonus, maternity/adoptions/paternity etc etc etc..

                    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                    Comment


                      #11
                      Originally posted by theartfullodger View Post
                      Ummm ... not always:

                      State pension, PiP, DLA, winter fuel, Xmas bonus, maternity/adoptions/paternity etc etc etc..
                      True it has got a tad out of hand in recent years, but generally the housing benefit angle is there for those who can't afford a house of their own paid for totally from their own monies, if more people could do what the OP suggested then we all would be paying a great deal more tax

                      Comment


                        #12
                        Originally posted by Hudson01 View Post

                        True it has got a tad out of hand in recent years, but generally the housing benefit angle is there for those who can't afford a house of their own paid for totally from their own monies, if more people could do what the OP suggested then we all would be paying a great deal more tax
                        Yeah. All £30 billion pounds of it. That is around £4000 donated from every average hardworking family every year for this "benefit" alone. Gifted to the over 5 million claimants involving 15 million beneficiaries. It is a gravy train that creates its own demand, and its own sickness in our society. We live in a society where young boys and girls would prefer not to work in hotels and cleaning toilets, being instead on these handouts while we import Eastern European girls to do that work. Sick.

                        Comment


                          #13
                          Originally posted by nukecad View Post
                          the only question that had been asked at the time was the OP's about the possibility of claiming benefits.
                          So why not stick to answering the question?

                          Comment

                          Latest Activity

                          Collapse

                          Working...
                          X