Housing benefit for related tenant?

by Readers Question

11:19 AM, 23rd August 2016
About 2 years ago

Housing benefit for related tenant?

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Housing benefit for related tenant?

Has anyone had a success with a housing benefit claim where they own a family members property and rent it back to them?relatives

I purchased my parents unencumbered home (for market value) in order to pay for renovations and to repay some of their debts. Almost 10 years on they have decided to claim housing benefit in order to start paying a small rent only to find the claim was declined.

The council said that my parents have deliberately deprived themselves of an asset? I find this unfair as the council would grant housing benefit if my parents lived in an alternative property not owned by me despite previously selling their residence.

Any ideas or guidance would be welcomed.

Jon



Comments

Steven Burman

12:27 PM, 23rd August 2016
About 2 years ago

Jon

I had a similar (although not identical) situation a few years ago where a property was puchased via a familiy trust for my brother to live in (he is ill and cannot work and so claims benefits). The problem was that my brother was a potential beneficiary of the trust (albeit a very minor beneficiary) and housing benefit was refused on the grounds that he would benefit from the property at some point. However, the Local Authority confirmed that if the property had been owned by me there would be no problem as my brother would have no 'interest' in the property.

In your case, the house was sold at market value some 10 years ago. It is clear that your parents did not sell it at that time to take advantage of the benefits system as they could not possibly have foreseen their financial position 10 years on. The Local Authority would have a difficult time trying to prove this was the case. The unfortunate thing is that the onus will be on you to prove that they didn't. As long as your parents do not have savings etc. that disqualify them from benefits I believe that local authority are wrong to deny HB although their decision does not surprise me as, in my experience, most LA's will do anything to absolve themselves of any financial obligation.

My advice would be to get yourself some appropriate legal advice and take them on. You could also try the local authority ombudsman.

Good luck

SB

Jon Halbert

13:12 PM, 23rd August 2016
About 2 years ago

Reply to the comment left by "Steven Burman" at "23/08/2016 - 12:27":

Hi Steven,

Many thanks for the response. I am currently in consultation with Shelter who are looking into it for me however they also think think that the LA will construe the sale as a deliberate attempt of depriving themselves as an asset. I have put the case forward that the sale price dissipated over 10 years is less than the average annual income which they agree with. I will look towards the ombudsman route although if they are anything like the financial ombudsman, they will be biased towards the authority.
Jon

Steve From Leicester

13:27 PM, 23rd August 2016
About 2 years ago

Mum & Dad previously had a home to live in, then they sold it, benefitted from the income, but continued to live in it, while ownership of the asset still remained within the wider family.

That's a very good reason for the council to not simply pay up without a fight. The onus is on you to overcome the councils cynicism by proving this was all above board and not just a ruse to squeeze some money out of the benefits system.

From my objective position the strongest point in your favour is the fact that the sale was 10 years ago. You'd have to be a very patient person indeed to have done all of this in the hope of bagging a bit of housing benefit ten years down the line.

Jon Halbert

14:07 PM, 23rd August 2016
About 2 years ago

Reply to the comment left by "Steve From Leicester" at "23/08/2016 - 13:27":

Exactly my point Steve. I have tenants that were the previous owners who sold their property to repay debts who have no problem gaining multiple benefits. The system is warped. I cant see anyone having a 10 year plan to gain benefits by selling their property?
Jon

Simon M

14:24 PM, 23rd August 2016
About 2 years ago

The Council has a duty to look after taxpayers' money, and contrived tenancy between relatives is a common form of fraud so most councils will ask HB claimants if they are related to their landlord. I think you might find this difficult to win. I believe the HB legislation requires the property must be let on a fully commercial basis, and the liability was not created to take advantage of HB. You mention only a 'small rent' - I don't know if there is a precedent on this - the Council would expect to see at least full market rent. They might also expect a formal tenancy agreement and for you to comply with all a landlord's legal obligations such as annual gas safety checks. I'm sure you did you did not purchase the property 10 years ago to take advantage of HB, but the Council may consider the liability for rent (and for the Council to pay HB) only has only arisen now in order to pay you.

H B

19:46 PM, 23rd August 2016
About 2 years ago

If your parents fail to get HB, would your next step be to evict them?

It may seem a bit odd that a rule that applies to non family members is not considered binding within a family, but Council's are concerned that allowing such arrangements would be open to abuse.

Robert Mellors

20:29 PM, 23rd August 2016
About 2 years ago

I would suggest that you purchase a copy of "Help with Housing Costs: Guide to Housing Benefit" published by Shelter, and study the relevant paragraphs carefully.
I would also suggest that you detail why your parents had no choice but to sell their home to you 10 years ago, so as to try to overcome any "deliberate" aspect of the deprivation of their capital asset, and to emphasize (with evidence) that they acted in "good faith" when selling to you.

Jon Halbert

21:56 PM, 23rd August 2016
About 2 years ago

Reply to the comment left by "Robert Mellors" at "23/08/2016 - 20:29":

Thanks Robert

Claire Smith

10:31 AM, 27th August 2016
About 2 years ago

Would the council pay housing benefit if your parents were renting somewhere else? Is there any chance of them taking a 6 month lease on another property and then moving to yours at the end of that?

Bill Williams

11:01 AM, 27th August 2016
About 2 years ago

My son was turned down for HB when I rented one of my BTL's to him, they claimed it was not a true assured shorthold tenancy, it was a property we originally occupied as a family home. I sent copies of all documents and letting agreements going back 15 years these they returned and conceeded it was a true contract by paying the HB to my son. Interestingly they did not confirm in writing.


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