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View Full Version : Can I let to my sister in law on LHA



Radders
26-10-2009, 17:49 PM
Hi,
I currently own (6+ yrs on a BTL mortgage with C&G) a 3 bed semi and my tennant is leaving soon (owing me rent of course), I have been using an agent (who I find to be lacking). I have all the usual certs - Gas, Electric, EPC etc.

My sister in law has just split up with her husband and cannot afford the mortgage payments on her house. So she is going to be repossessed - eventually. She has asked if she can move in to my house and set up a tenancy agreement as she will be entitiled to LHA as she has 2 children over 10. She only works about 10 hrs a week and one of the children gets disability allowance, not sure what other benifits she is on.

I am not sure if this is allowed under the LHA rules as I have read somthing about contrived tenancy ?

If this is allowed how do I part ways with my agent.

Any advice would be greatly received.

Poppy
26-10-2009, 20:02 PM
When the current tenancy ends, write a bye bye letter to the agent.

Can your sister in law afford the market rent for this property? If so, you are part way to proving to the local authority that the tenancy is not contrived.

Is the property mortgaged?

Radders
26-10-2009, 20:07 PM
No I don't think she has the funds to rent the property - she may be able to scrape together the 1st payment. But after that i don't think she would be able to.

Yes the property is mortgaged with C&G, it was a normal mortgage and then we changed it into a BTL mortgage.

I have instructed the agent to look for some new tennants but they have not found anyone so far - where does this leave me ?. I know I will have to pay for the service I have asked for. This tennat who is now leaving has been trouble from the start with late payment and so forth and the one before him was just the same. The quality of tennant they are selecting seems to be a bit low.

Poppy
26-10-2009, 20:18 PM
Change letting agent! Surely the (poor) results speak for themselves. Why give them another chance to mess up? I certainly wouldn’t.

If your sister in law cannot afford the rent, I would not give her a tenancy. Period.

Sorry didn’t read your post carefully enough on the mortgage front. Most mortgage lenders prohibit letting to family members. Does yours?

Choose a different letting agent that does not charge perpetual renewal fees. If they all do, then negotiate the fees out. The right tenant will come along soon.

Mars Mug
27-10-2009, 07:08 AM
This thread may help;

http://www.landlordzone.co.uk/forums/showthread.php?t=22998

When you say your Sister-in-law can't afford the rent, is that without any housing benefit?

Radders
27-10-2009, 07:25 AM
no she would not be able to afford it if she did not reeceive housing benifit. I cannot afford to let her live there rent free as I have a mortgage to pay. Therefore she would have to leave.

durbs
27-10-2009, 07:41 AM
If you can show this is a commercial arrangement between you and your sister, that there is a valid tenancy and that if she accrued arrears you would (as you would with any other tenant) evict her through the normal procedures. If she can show this then you should be fine and she should be awarded Housing Benefit.

Basically there are 2 things Housing Benefit consider when renting to a relative.

1)Contrived tenancy, was the tenancy created to take advantage of the HB system.

2)Is the tenancy commercial i.e. would the property be rented out anyway, would you evict for non payment of rent etc


You have a history of renting this property out before, you have a buy to let mortgage. I can foresee no problems whatsover in her claiming HB. They will ask questions of course but it will be fine providing you are open and honest about it. I worked in Housing Benefit for 5 years so know what I’m on about! I would have had no hesitation in awarding benefit in this case.

theartfullodger
27-10-2009, 08:02 AM
The rules are complex: Go to the experts in these matters, Shelter, see
http://england.shelter.org.uk/get_advice/paying_for_a_home/housing_benefit_and_local_housing_allowance/housing_benefit_if_renting_from_a_family_member
- in particular

I live in a property owned by a family member - can I claim housing benefit?

If you live in a property owned by a family member and pay them rent, you may be entitled to housing benefit. However, this will not be the case if you (or your partner) are responsible for a child and are renting from the other parent of that child.

The council will also want to check:

* that you're paying rent on a commercial basis. In other words, that it's a proper tenancy, not just an informal arrangement between family.
* that the arrangement has not been set up in order to take advantage of the housing benefit system - this is called a 'contrived tenancy'. For example, if your landlord only asks you to pay rent when you are not working (and so eligible for housing benefit), but not when you are working (and earning too much to claim housing benefit), this would be a contrived tenancy.

Make sure you have enough evidence that the rent compares OK (ie ain't lower than) other similar properties advertised for rent by other private landlords. Then go with SiL to have a chat with the Council housing people, being entirely open & honest, and taking tenancy agreement you plan to use.

Cheers!

Lodger

Mars Mug
27-10-2009, 09:27 AM
no she would not be able to afford it if she did not reeceive housing benifit. I cannot afford to let her live there rent free as I have a mortgage to pay. Therefore she would have to leave.

But isn’t that the point of the thread, that you let to her and she claims benefit? You need to know that the amount of benefit she would receive would cover your normal rent for the property, you can't lower the rent to suit the situation.

Radders
27-10-2009, 13:43 PM
But isn’t that the point of the thread, that you let to her and she claims benefit? You need to know that the amount of benefit she would receive would cover your normal rent for the property, you can't lower the rent to suit the situation.

Sorry, I may have confused you. If she is allowed benifit for my property then she can afford it, the checker says she is entitled to a 2 bed at approx £120 median a week, my estate agent is recomending about £450 pcm for new tennants (although currently set at £485) for my 3 bed semi. Therefore the HB would cover the rent as I intend to charge £450 pcm.
What I was saying is if she is not accepted then she would not be allowed to stay and I would have to evict her as she could not pay the rent without HB and I cannot afford for her to live there rent free.

Mars Mug
27-10-2009, 14:16 PM
I did think that might be what you meant, but it’s important to get that clear because some people have rented at below market value to bring the rent in line with the benefit which is a pretty clear contrivance.

You are correct that if she is unsuccessful with the benefit claim that you would have to evict, and your sister-in-law may be asked questions like that i.e. ‘what would your landlord do in the event that you were no longer eligible for benefit and were unable to pay rent’. They just want to see that you would treat the letting as a commercial concern.