MarkJ Posted January 2, 2007 Report Share Posted January 2, 2007 Greetings All I'm new to this game so please bear with me. Some background first; I've been looking to buy a BTL for a while. Then, unfortunately, my sister split up with her (w@nker of a) husband, so needed somewhere to move into. Being a nice brother I decided that (against my better judgement) I'd buy a house to let to her (known tenant, 'guaranteed' rent, won't trash the place etc etc). To complicate matters she's going to be on the dole and thus getting (at least some of) her rent paid by the DHSS. OK, so that's where we are. I know that there'll be those of you out there who say I'm mad doing this but hey.... Anyway, the council have now said that they want to visit her, with me in attendance. I'm led to believe that this is to check that it's all above board and legal (which it is), and for them to approve her rent payments. Has anyone been in this situation? Any ideas as to what else they'd be looking for? Anything I should be wary of in terms of questions they might ask etc? Any advice or guidance appreciated.... Mark Link to comment Share on other sites More sharing options...
SPEEDTWIN Posted January 3, 2007 Report Share Posted January 3, 2007 My local council wont pay a landlord if the tenant is related to them unless it goes thro a letting agent. i think it is to stop any funny buisness going on. (chichester distrist council) Link to comment Share on other sites More sharing options...
Matthew Posted January 3, 2007 Report Share Posted January 3, 2007 I think you may have trouble with doing that as you're family, they may say they will only pay if she has nowhere to live, i.e. she has been evicted by you. However, it does depend on the council as one of my friends' sister lives at her mums flat and her mum gets money from the DHSS. However, another consideration, does your mortgage company allow DHSS tenants? Nearly all don't. Also I beleive that most don't allow tenants to be family. All of this won't be a problem until you either sign up to an extended deal or remortgage (as they will need all the legal documents), something to bear in mind though! Good luck! Link to comment Share on other sites More sharing options...
mad_maz Posted January 3, 2007 Report Share Posted January 3, 2007 Hi I rent to two of my children one of whom is employed and the other currently claiming benefits. I had to send a copy of the tenancy agreement to the Benefits Agency and also received a telephone call from them, to check that everything was above board. I was appalled at the suspicion that arose because I chose for my family to rent direct from me and I wrote a letter of complaint to the Benefits Agency. My argument was that I would rather my family rent from me, than from some unscrupulous landlord. The tenancy went ahead with no further problems, but if there had been I would have continued to fight their decision. I do not use Letting Agents, but my business is run in a professional manner, and as long as you are not trying to run a scam there should be no problem. Having said all of that each LA may have their own guidelines, but if you're happy to go ahead stick to your guns. Marion Link to comment Share on other sites More sharing options...
Trenners Posted January 4, 2007 Report Share Posted January 4, 2007 Hi Markj, I'm really experienced (now) at letting property to Housing Benefit tenants (the DSS was abolished about 23 years ago). There are definitely rules in place about letting to family members and receiving Housing Benefit payments. I know that a son / daughter are DEFINITELY not able to rent a property from their MOTHER / FATHER (irrespective of whether a letting agent is involved or not) and then pay the rent to the mother / father via Housing Benefit. If I were you - I would contact the Benefits Office and ask them what the rules are. Good Luck, Mark Link to comment Share on other sites More sharing options...
Matthew Posted January 4, 2007 Report Share Posted January 4, 2007 I can see why such rules are in place. If renting to your own children is allowed, then in theory parents could start getting housing benefit payments for their children living with them if they are unemployed after the age of 18. This would really increase costs for the council. Therefore I don't think it should be allowed. Link to comment Share on other sites More sharing options...
Melboy Posted January 4, 2007 Report Share Posted January 4, 2007 I am fairly certain that the Council won't allow this to happen......... however, Mark Trenners should be able to give you a definitive answer to your question. Link to comment Share on other sites More sharing options...
plym77 Posted January 5, 2007 Report Share Posted January 5, 2007 On the matter of tax.... Is she going to pay market rate? If not, this is known as peppercorn rent and therefore, if any 'rental loss' is made, it will be lost, compared with a normal market rate rental property, which, if a loss is made, the loss can be carried forward against future profits. regards Sherena Link to comment Share on other sites More sharing options...
Trenners Posted January 6, 2007 Report Share Posted January 6, 2007 MarkJ, As Melboy promised ...... "here is the definitive answer" .... The Housing Benefit department will want to be sure that this is an "arms length transaction". In other words, they will want to be sure that even if you had not decided to let the property to your sister you would 1) have still purchased the property, 2) still let the property, 3) charged the same amount of rent, 4) offered the same included services (if any) etc etc You will NOT be surprised to learn that the Housing Benefit department have a FORM that you need to fill in to cover all these questions. If they feel that you have only purchased the house to "help out your sister" - then they are not going to look favourabley on your claim. Hope that helps .... Good luck, Mark Link to comment Share on other sites More sharing options...
MarkJ Posted January 13, 2007 Author Report Share Posted January 13, 2007 Thnaks to all that have contributed so far. In answer to Trenners, "would you 1) have still purchased the property, 2) still let the property, 3) charged the same amount of rent, 4) offered the same included services (if any) etc etc" Answers to all are yes. Plus it's a market rent. In fact it's spot on what the valuers put on their report to the mortgage company. She's signed a 10 page contract (belt and braces). I haven't been given the form yet that Trenners mentions. Meeting has now been put back to the end of the month, due to delays in finalising completion with the vendors. Any more contributions welcome.... Mark Link to comment Share on other sites More sharing options...
MarkJ Posted February 17, 2007 Author Report Share Posted February 17, 2007 Update for anyone that's interested..... Had the meeting (with an efficient but frosty woman from the council). She grilled my sister first on what she paid so far, did she have proof of payment, did she have contents insurance, any other household bills etc, copy o fthe contract etc. Then it was my turn - why did I buy the property, would I have bought it if it wasn't my sister renting (yes I would), the contract, why was the rent set as it was (its at market value but fortunately the lenders' vaulation put it at exactly the same figure), did I have buidings insurance (yes), and mainly what I would do a) if she didnt pay (I said I'd evict) and b ) how and then would I tip her out if I could get more rent (which was an odd question as we have a contract and its market value rent). As I say it was efficient but frosty. Two weeks later, letter came through from the council saying yes they'd pay it. So there you go..... Hope this is helpful to others should they need it. Link to comment Share on other sites More sharing options...
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