Can L offset rent against mortgage payments under HB?

[ninjafairy]

Hi,

I'm not sure if i've posted this in the right place, so if it isn't feel free to move it :)

In December last year, we needed to move out of our previous home (mortgaged) due to the size of it (2 bed - we've two kids, a boy and girl and they've got to the age where they can't share a room anymore). We had tried to sell it for months before, but because of the state of the housing market where we live, it didn't sell so we decided to rent it out to try and cover some of the mortgage which, obviously, needed to still be paid each month.
We moved into a rented property, income dropped dramatically, and found ourselves needing to claim housing benefit (husband is self employed so income is erratic).
Having told the council our circumstances, we thought it was fine, and it was until this week.
The council has now decided that the income from the tenant in our old house is all going in our pocket, and have totally ignored the fact that we've still got to pay the mortgage on it through no choice of our own. We can't sell it - no-one wants it.

What I need to know before putting in an appeal is, is it possible to have the rental income offest against the mortgage interest (as with the self assessment tax return), showing a more accurate figure for them to work out our entitlement?

Thx

[Michael Clayton]

Take the amount of rental income and deduct from that : -

All outgoings in respect of the letting (e.g. council tax, agent's fees, etc)

The balance is taken into account as capital. (Let me know if you need to know how to value capital for HB purposes).


Under no circumstances should anyone treat this as a maxim to apply to their own situation. It is vital that you check with a specialist HB consultant.

Although this seems like a straight forward analysis, this is one of the most difficult questions I have answered on this forum.

I had to determine whether or not the owned property is 'disregarded' for HB purposes. The only way it could be would be in the event of the property being rented out to a relative aged 60 (or over) who is incapacitated and/or aged 60 or more. I have assumed this is not the case here.

[ninjafairy]

Thanks for your reply, Michael.

When you state to deduct outgoings, can these include the full mortgage or interest? This is the part I cannot find anything on - it really is a strange situation I never thought I would see myself in, and it seems (by looking on Google) neither has anybody else (Loan interest is an expense as far as HMRC are concerned).

I know I can include the agent fees, but can I also claim things like the gas/electric/water for the period we put the property on the rental market to when it was let?

I would be grateful if you could explain how to value capital for HB purpose. The more I know, the better I think I will be able to deal with the council.

Thanks :)

[ninjafairy]

Just a thought...

Can the letting out of our old property now be classed as part of the business (DH is already self employed)?