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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.
From what you say do I understand that your sister does not live in the property presently please and that you intend to charge her a market rent?
Will you live in another property elsewhere?
she currently rents privatley and recieves housing benefit she pays £400 rent they pay £380 i intend to charge her the same and I wont be living at the property
It is permissible for a relative to rent a property to a relative providing the council are satisfied the arrangement is not an abuse of the benefits system. They have a number of test that they apply to check this is not the case. For example if your sister were living with you she would not be able to claim housing benefit; nor can benefit be claimed if you are charging less than a market rent.
However if she is not presently living in the property rent free, you will not be living with her and you intend to charge a market rent this is a situation in which she can claim housing benefit.
So if I can prove I life elsewhere via bank statements and show that she paid the same amount in her previous house we should have no issue?
Because of the suspicion of fraud between relatives one does need to be extra careful to ensure all the usual formalities are fulfilled that usually would be and no exceptions are made because it is your sister.
You may be called upon to show you have residence elsewhere as you suggest and that the rent is typical for that size of property.
Is there anything above I can clarify for you any further?