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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25489
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Myself and my partner rented a house to my sister that we own

Customer Question

Myself and my partner rented a house to my sister that we own ,she is 67 so the council pay 84pounds rent for her ,but because my partner did all the signing up they have stopped her rent ,and asking loads of questions ,what have we done wrong c
Submitted: 2 years ago.
Category: Law
Expert:  Joshua replied 2 years ago.
Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

Could you kindly clarify what you mean when you say "because my partner did all the signing up" please? What exactly did your partner do?

JACUSTOMER-lw5nc2og- : He signed the tenancy agreement that he owned the property and she could rent it from him
Joshua :

Thanks.

Joshua :

For the avoidance of doubt, he did not sign on behlaf of your sister - but simply signed as landlord (owner) of the property. Is that correct?

JACUSTOMER-lw5nc2og- : Yes
Joshua :

Thanks.

Joshua :

Finally do you also live in the property or does your sister have sole occupation of the property? Do you charge a market rent to your sister for her occupation?

JACUSTOMER-lw5nc2og- : She as sole occupation ,we charge a little less than normal because she is a pensioner on her own
Joshua :

Thank you. It is possible to rent your property out to a relative but there are very strict rules about in what circumstances and under what terms you can do this as follows:

Joshua :

1) The rent must be on a commercial non discounted basis. You must charge a market rent.
2) You cannot share occupation with your sister;
3) You must treat your sister as any other commercial tenant putting in place a tenancy agreement and ensuring rent is collected each month

Joshua :

Providing you can satisfy these tests and the general test that you arrangement is not an arrangement set up to take advantage of the benefit system - known as a "contrived tenancy" then housing benefit can be claimed.

Joshua :

based upon what you say, there is a risk in relation to you charing a discounted rent to your sister. You will need to be clear that you are charging what you consider to be a market rent. If you are offering a discount because she is your sister this can be sufficient for the local authority to deny housing benefit. If the council claims as much you may consider arguing that you consider the rent charged to be a market rent citing examples of comparable local properties you used to determine the same.

Joshua :

Other than that providing you can show that there is a formal tenancy agreement in place your sister can seek housing benefit to pay her rent. The council is entitled to ask questions in relation to the tenancy and you will wish to consider the above in providing answers to them but generally must answer these honestly. If they decide against providing further housing benefit your sister has a right of appeal. The council must provide her with a copy of the complaints procedure in this event.

JACUSTOMER-lw5nc2og- : The council themselves said it was all they would pay on her behalf ,so we said she could stay ,we originally asked a market value of £100
Joshua :

If she is not satisfied with the outcome of her complaint (appeal) regarding the councils initial decision then she can refer her complaint (appeal) to the local authority ombudsman using the following link:
http://www.lgo.org.uk/forms/ShowForm.asp?fm_fid=62

Joshua :

The rule is that you must charge a market rent in order to be eligble for housing benefit. Accordingly your argument must be that you consider the rent charged to be a market rent. Any other argument will not suffice. That said if the council advised you that the property was only worth rent of £x then you could use this as additional evidence of the basis for your decision on what to charge as a market rent though you should ideally also have examples of other comparable properties to use as well.

Joshua :

Does the above answer all your questions or is there anything I can clarify or help you with any further?

JACUSTOMER-lw5nc2og- : Thankyou for helping at least I no we were not being dishonest ,Pam
Joshua :

A pleasure. I hope you are able to sustain an argument that you are charging a market rent. Remember that councils are keen to minnimuse payments so they will not hesitate to use a technicality to avoid payment. Accordingly try to be ready for an argument that the rent isnot a market rent by having evidence and ammunition you believe supports that it is.

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