Avoid the Benefit Cap – Ask me anything

by Robert Mellors

10:02 AM, 22nd April 2014
About 7 years ago

Avoid the Benefit Cap – Ask me anything

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Avoid the Benefit Cap – Ask me anything

My name is Robert Mellors and this article was prompted by me watching the TV programmes about the Benefit Cap, and “How to Get a Council House” last week.

It occurred to me that from my years of experience in working in local government housing departments, and in various advice bureaus, including being a caseworker specialising in debt, benefits, and housing, that I could advise people how to prevent the Benefit Cap from applying to them.

It’s not difficult, you just need to know how to do it, and be willing to make those few simple changes, so if this affects your tenants then you may wish to ask me a question below (or your tenants may wish to).

The Benefit Cap affects families with a larger than average benefit income, most usually due to the number of children in the household. It does not just affect people in London, but the more expensive the property prices then the more significant the Benefit Cap will be.

There are several ways to avoid the Benefit Cap, including making changes to the household or obtaining employment. I can advise on strategies for changing the household composition in some cases, so that everyone is still housed but it is considered differently and thus the Benefit Cap does not apply. I can also advise on strategies for self-employment that would meet the criteria so that the Benefit Cap will not apply. These methods are completely legal, and will benefit the claimant by preventing rent arrears and homelessness.

It would also benefit landlords by avoiding rent arrears and the need to evict welfare benefit claimants. It also benefits the taxpayer (society as a whole), as dealing with homeless households cost the taxpayer far more than preventing their homelessness, and it can also help people make a legitimate living from self-employment long term so that they eventually contribute taxes to society rather than stay on welfare benefits.

Getting the right advice, and taking a few very simple steps to change things, can make a massive difference to people’s lives.100xrobert mellors


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Comments

Neil Patterson

13:54 PM, 22nd April 2014
About 7 years ago

Hi Robert,

I am intrigued by how self employment can help as from my past experience that normally precludes you from any/all state assistance.

Robert Mellors

22:06 PM, 22nd April 2014
About 7 years ago

Hi Neil

It's basically meeting the working 16/24 hours rule, as this then means that you are not subject to the Benefit Cap. What many people don't realise is that you don't have to get a job, as self-employment counts, and the great thing about this is that the self-employment does not have to be profitable (so no penalty if the person is rubbish at it), and it is self-declared hours so nobody checks how many hours you do (and of course time spent on training, paperwork, travelling, etc can all count as part of the hours anyway).

Self-employment from home can be set up for about £100, and there are lots of options. It does not matter if the person is unskilled so long as they can read and write, then they can set up a very simple business, for very little money, and this will save them a small fortune in lost benefit and thus protect them from rent arrears and eviction.

The best self-employment option (suitable for just about anyone) I've found for this is https://www.utilitywarehouse.co.uk/?exref=J81760 just click on the "earn with us" link at the top of the page. This is so good and simple I am a distributor for them, but if people don't want to do this particular self-employment then there are also other options like Kleeneze, Betterware, Avon, etc, which are all quite simple to do (but unfortunately do not give the ongoing residual income).

Declaring self-employment, (if you have no, or very low, net profit from it) will actually increase the household income because the household then gets extra Working Tax Credit (WTC), and they can still get full Housing Benefit (HB). There are also a mass of things (expenditure) you can potentially offset against any gross profits, (computer, some car running costs, part of household bills (for running your office from home), public transport, parking, etc, etc) and this keeps your taxable income (income that WTC & HB take into account) down to a level that enables you to get the maximum WTC & HB, AND not be subject to the Benefit Cap.

This means that when someone starts self-employment, they don't need to worry about the build up period when the business is not making a profit as they would still get welfare benefits (more than when simply unemployed) AND they would not be subject to the Benefit Cap. Of course when their business starts to make a decent net profit, then the net profit income would reduce their welfare benefits.

Therefore, in relation to the Benefit Cap and it's effect on Housing Benefit and thus the tenant's ability to pay the rent, self-employment (even if non-profitable) will benefit your tenants and also you as their landlord.

The same principle can also apply to some people who are subject to immigration rules (i.e. overcoming the Housing Benefit restrictions).............. but perhaps this is a separate topic?

Don Holmes

11:34 AM, 23rd April 2014
About 7 years ago

Hi Rob
this is all very interesting and helpful, you will note from my 118 profile I run a lettings franchise group and we have many LHA claimants, I would be interested in knowing where you are in the country and what you are now doing as your talents are something we could use.

Maybe you could contact me direct, don@godirectlettings.com
Thanks Don

Robert Mellors

23:18 PM, 23rd April 2014
About 7 years ago

Hi Don

I'm based in North Nottinghamshire. I set up and run an independent housing association (not reliant on government grant funding). I manage about 60 tenancies, including family lets and HMO accommodation. Most of my tenants are LHA/Housing Benefit tenants (or licensees).

Colin McNulty

6:18 AM, 27th April 2014
About 7 years ago

Ooh some nice tips there Robert!

> changing the household composition in some cases

I'm guessing this is if there's another adult in the household, e.g. a kid that's turned 18 and is eligible for their own independent claim, or a brother or uncle or father living with the family?

Robert Mellors

22:58 PM, 27th April 2014
About 7 years ago

Reply to the comment left by "Colin McNulty" at "27/04/2014 - 06:18":

Hi Colin

Yes, it may be possible to change household composition when there is more than one adult member within the household, e.g. adult children or extended family members. The options available would be specific to the particular household, but quite often households are not aware of the options, or even if it does cross their mind they may need help to make the necessary changes that would protect their tenancies.

MoodyMolls

16:14 PM, 29th April 2015
About 6 years ago

Hello Robert

I have a lha person who has a daughter and child living within the house makeup.

Would it be possible to create two tenancies one for the child and daughter (mum) and one for the daughters mother and other 2 children. When I approached the council on something similar they said it was contrived.

I was about to fill in a NB5 to evict as rent arrears but thought I would look at this option first.

Any help would be greatly appreciated

Robert Mellors

18:48 PM, 29th April 2015
About 6 years ago

Reply to the comment left by "KATHY MILLER" at "29/04/2015 - 16:14":

Hi Kathy

If they are already part of the household, then trying to alter the tenancy would probably be considered to be contrived. If the adult children were not part of the household, and currently lived elsewhere, but were thinking of moving in with family, then issuing a new tenancy for the new household composition would not be contrived as you would simply be issuing a new tenancy to take account of the new circumstances, but this would still be ONE tenancy (a joint tenancy with the adult child), not two separate tenancies for the same address.

However, it does sound like they would probably be entitled to the 4 bed rate of LHA with their current household composition, so check that this is what they are getting (I cannot say for sure without knowing the ages and sexes of all household members, but you can check the bedroom entitlement on the LHA-Direct website). If the 4 bedroom rate of LHA is not enough to cover the rent you charge, then the chances of them ever being able to afford the rent is slim and their rent arrears are likely to increase as time goes on.

However, this scenario is very different to the "benefits cap" issue that this post was originally about. Are your tenants also affected by the benefit cap? or are you just wondering about the feasibility of splitting the tenancy into two separate tenancies?

MoodyMolls

6:31 AM, 30th April 2015
About 6 years ago

Hi Robert

Thanks for reply. No currently the benefit cap does not effect them possibly will after May 8th.

Bur could you please explain when two tenancies within one household is permitted.
I have read that many landlords do this .

Yes they do claim the 4 bed rate but deductions are being taken for non dependants. One of the children got a job and they took 400 from the housing benefit. The tenant tells me that she is earning bet 700-900 per month.
They say they are unable to topup. The mother suffers with depression and it can be months before I get any replies from them.

Robert Mellors

23:10 PM, 4th May 2015
About 6 years ago

Reply to the comment left by "KATHY MILLER" at "30/04/2015 - 06:31":

Hi Kathy

As far as I know you cannot have two tenancies for one household (one address). I suspect you may be confusing this with two Housing Benefit claims within one household, which is possible in some circumstances, but would be where there is a joint tenancy between two adults who are not a "couple". In this situation the total rent charged would be apportioned between the joint tenants and each Housing Benefit claim would be assessed based on that apportioned share of the rent. The joint tenants can be related adults, e.g. mother and adult daughter, but only if the tenancy started on this basis, or the second adult joined the household at a later date and a new joint tenancy was issued AT THAT TIME. It cannot be where the second adult (e.g. adult child) is already part of the household and has already been classed as a non-dependent. Thus, it does not help your current situation with your existing tenant and her family.

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