Should I let to family through my limited company?

Should I let to family through my limited company?

9:43 AM, 29th May 2020, About 4 years ago 26

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As the title suggests, I’m considering getting a BTL via a limited company with the intention of letting it to family – who would claim housing benefit. The family already lives in a council flat and benefits from getting housing benefit.

The council flat is not fit for them anymore and I thought instead of council placing them in accommodation (which would be an AST and at risk of being temporary) I can provide a more stable home with no intention of eviction.

Is there anything I need to consider, legally or financially, or is this simply another BTL via LTD Co.? I appreciate the risk of non payment and any risk of arguments arising from working with family.

Many thanks


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13:48 PM, 29th May 2020, About 4 years ago

Thank you all for your well wishes and concerns. To summarise all comments so far:
- Dispute can and most certainly will arise - I have fully accepted this risk. Given that they already get housing benefit and pay rent to council on time and I will be replacing the council or housing association as the beneficiary of rent. I have no other personal relationship concerns

- Simon M brought to attention the issue of 'contrived tenancy'. Have had a quick read on

It appears I wont in contrived tenancy situation due to (please correct me If I'm wrong):
- I wont live there
- There will be a commercial agreement at fair market value
- There wont be Contrived Agreement
Contrived arrangements
If a person's agreement to pay rent was set up to take advantage of the housing benefit scheme then housing benefit is not payable.[6] To deny housing benefit for this reason, the local authority must be satisfied that the main reason for creating the liability is to obtain or increase housing benefit entitlement. Local authorities must consider each case on its own merits.

- Yvonne Francis brough to attention ATED (Annual Tax on Enveloped Dwellings). This appears to be a genuine concern, as the property will most likely exceed £500k in circa 5 years. Not right now. I would consider paying this then.

Additionally I intend on consulting the local council whilst going through the process to make sure they are aware and at the same time I'm not in breach of any regulation. The Ltd Co. will only benefit only as much as the housing association at the most. I have no intention of abusing our HB system (which I'm thankful for).. It has been great to see all this constructive input so far. Look forward to more..


14:11 PM, 29th May 2020, About 4 years ago

Reply to the comment left by Dennis Leverett at 29/05/2020 - 10:15
I had my brother living in my flat when he needed to apply for housing benefits as his business was doing bad the council told him and myself that he can not claim benefits as I should house him for free. I was well annoyed as I have a mortgage and service charge to pay. In the end he had to move in to a room in a shared house and council paid some of his rent . They were so difficult so would not cover the full rent for the room. Seem they try hard not to help.

LordOf TheManor

16:00 PM, 29th May 2020, About 4 years ago

I had no other 'personal relationship concerns' either, Jay. The errant relatives of mine were in the same situation as yours is now. In their previous accommodation, they got housing benefit and paid their landlord on time, every month for over two years. I'd furnished all the big items of that flat for them as it was their first home. The family seniors happily chipped in with the practical smaller items that make a place a home. It was an exact re-enactment of what we'd done for the younger brother of the relative in his first flat a few years before i.e. no sign of anything untoward in the mutual pulling together of a family.
The offer of better paid work was the reason the errants moved towns - and subsequently into one of my flats, close to all the family who'd put the two homes together previously. Should have been an ideal situation + they gained family childcare support saving nursery fees
HB was applied for and was easily approved via transfer information between councils and paid to tenant relatives to pay me, expecting to be reviewed with the new job opening - starting within a couple of weeks. Tenant-relatives decide the pay was not worth the effort to earn the wage. (Basically, they can't get out of bed to get there). HB comes in, they decide to live on that instead - so I don't get paid.
Somewhere along the line, their allegiance to their landlord - relative dissipated. They didn't feel obliged to pay their rent (maybe because it was me, not a stranger?) nor did they look for different work or any work. I found them pay-rolled work at 50% more than the job they'd moved for. Their conversation was about wanting more time to settle than look for work at that time.
The surprise they had was when, after 2 months in arrears, the HB got paid direct to me. There were no issues from the council with that, none whatsoever. Because I'd stopped the errant relatives living off HB and by doing so had changed their status to 'adherence to jobseekers' conditionality' (and much lower income) was the nail in the family coffin.
The blackmail retaliation aimed at me was at the expense of the senior relatives, who passed away while this played out. There were family members who could've stepped in but opted to do nothing in case they were similarly denied access to the child of the tenant - relative.
So, in summary, Jay..... I am sure you will still say that you have no such qualms that your family will behave this way (but it doesn't mean they couldn't!) However, I hope your crystal ball works better than mine ever did.
Furthermore, I would add that circumstances change for everyone along the life-cycle, which includes YOU, Jay. If your health deteriorated rapidly, for example, and you had to make decisions with only YOU in the frame..... how secure would your tenant - relatives feel then? Is there any separate provision for them as just ordinary tenants or are you breeding a dependency on your inheritance? Just asking???
Final point: have you considered the changing dynamic in your family set-up by housing family? Family and friend relationships are usually most successful along the lines of equality, i.e. the give 'n' take of our natural relationship and the sharing equality of 'stuff' and 'personal effort' that goes into the mutual joys we share. Please ensure that you are not creating a potentially damaging new 'master and servant' relationship within your family that has't existed before. Only saying....... good luck to you!

Bill irvine

17:33 PM, 29th May 2020, About 4 years ago

Hi Jay

Leasing to a “close family” member, like a mother, brother, sister etc. is perfectly legal & above board. Despite that, many housing benefit & universal credit “housing costs” claims are refused, usually on the basis the Council (HB) or DWP (UC) views the tenancy agreement:
1. A sham agreement; or
2. The terms of the agreement, between the parties, is non-commercial in nature; or
3. The claim was made to abuse the HB or UC scheme.

In fact, in the majority of cases, I become involved with, the grounds for refusal incorporate all three reasons above.

If you examine my website and/or the RLA’s, you’ll find a range of examples which illustrate the likely problems you’ll encounter. My most recent case involved a couple, with a Ltd company, renting to their mother. The mother moved into their property because of her age, ill health, it was more more suitable in size etc. Closer in proximity allowing more regular support.

The good news is, most appeals are successful but can sometimes take 6-12 months to secure.

Important things to consider:

1. Be perfectly honest from the start about the relationship between tenant and directors of Ltd company;
2. Make sure the tenancy agreement is of a standard type making no obvious “family” related concessions;
3. The agreed rent should be both reasonable and affordable;
4. Payment arrangements should be formal, ideally showing bank transfers from one parties bank to the other;
5. If the claim is refused, the tenant should make some effort to meet at least part of the contractual agreement.

Good luck.


Bill irvine

17:40 PM, 29th May 2020, About 4 years ago

Reply to the comment left by Bill irvine at 29/05/2020 - 17:33

I’m on the hoof at minute, but here’s my bulletin on latest case:



20:05 PM, 29th May 2020, About 4 years ago

I think if this is your only rental then you would find it hard to defend as uncontrived. If you were already a landlord with several properties it might be different.

More importantly, no-one seems to have mentioned that B2L is unregulated and prohibits letting to a family member, also often prohibits HB. You would have to get a consumer mortgage of which there are not many and they are difficult to get and expensive. Being a limited company will not make any difference. I suggest you approach a broker before you go any further as the HB is unlikely to cover the payments if even the lender would agree (doubtful).

If you don't get the HB (which you won't know until everything is in place) you could end up subsidising this property much more than you seem to realise at present.

Do you currently own this property? or is it a purchase?

Claire Bartley

7:43 AM, 30th May 2020, About 4 years ago

In addition to all the above, if you're using finance for the purchase the lender will not allow you to let the property to a family member.


10:53 AM, 30th May 2020, About 4 years ago


Everyone has their own take on advice.

1. Phone local council hb department and ask their take.

2. I have rented to a family member and council phoned me to confirm he was a family member and they agreed to pay AS i was not a father of a family member renting which is prohibited. IE, not a son or daughter.

3. Check Universal Credits website to check “their exclusions” on renting to family member.

4. You may not get market rent with a family member

5. If family member has children - do the right thing and help them whilst maximising the rent received via 2/3/4 bedroom rates.

6. Set up your tenancy squeaky clean, bond protected, inventory, NRLA tenancy agreement.

7. Lucky no 7. - feel good about what you are doing 🙏🏽👍🏾🌈

Cheers - Kulasmiley Kev 😂

Bill irvine

11:33 AM, 30th May 2020, About 4 years ago

Reply to the comment left by Kulasmiley at 30/05/2020 - 10:53
Hi Jay

As one or two of the posters have commented it’s important to be honest with your lender on your intention to rent to a “close” family member. Whether you do or not however, doesn’t prevent HB or UC’s “housing costs element” being paid to your tenant. What is important, as I explained in my earlier post, is the intentions of the parties to create legal relations.

As long as the property you are proposing to lease is separate from your own accommodation there are no HB or UC regulations specifically excluding close family members. Whereas, if you rent a room in your own property to a son, daughter, mother, father etc. That’s specifically excluded.

If you contact your local council for its take, it’s more likely to say, it can’t until a claim for HB is made and it’s au fait with all the facts, as claims should be assessed individually, on the facts, with no one factor Trumping others.

One or two posters have referred to the issue of “contrivance”. The HB regulations makes no reference to this. What is referenced in Regulation 9 (1) (L) is the possibility of the claim being based on an “attempt to take advantage of the scheme”. Upper/tier judgements however warn councils against assuming too much importance on this as its usage could cause “Rough justice”. These decisions which must be followed by Tribunals also point to the fact, there is absolutely nothing wrong with a landlord, tenant or both, making best use of the scheme as long as their motives are not borne out of an attempt to “abuse”.

The following link is an article I produced for the RLA on the same topic.

I hope you find this helpful.



14:17 PM, 30th May 2020, About 4 years ago

It's very tempting, when you see HB or UC paying another landlord's mortgage (or in your case being paid to the council), to think that if you buy a property, HB or UC could be paying your own mortgage. Win/win situation - they get a nice house with a sympathetic landlord, and you get the mortage paid.
The first time they ring you because (for example) the toilet is blocked, and you say "That's your responsibility ...". You will hear the immortal words - "It's all right for you..."
And when the day comes that you have to ask them to leave (your financial circumstances may change, or you may simply get fed up with being a landlord) you will suddenly become the black sheep of the family. Trust me.

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