Allowed to claim housing benefit on property bought from family and renting to them?

[AvgJoe]

Hello

I had some advice about this a number of years ago from the solicitor who did the sale which I thought may have been incorrect. They said that to stay off the council's radar we must never rent the property to each other ever because we are close family and I bought it off them.

In 2016 my parents gifted me 200k to take out a mortgage to buy the London house we all lived in and out it in my name only. It was sold to me at market value (360k). The mortgage was residential and we all continued living there as before.

Last month due to buying another house, this original house has been legally remortgaged under LTB (let to buy) and the hope is that my parents who are now pensioners can rent it from me (I am moving out and bought another property I now live in) via Housing Benefit only in order to pay for the remortgage.

I understand that under normal circumstances this is completely OK and legal.

My parents still think of the original solicitor's words and do not wish to do this (not out of principle but due to the prevois warning). They said if I can get other solicitors or learned members to say otherwise they'd consider it, but they want to stay out of legal trouble.

Please could I have advice on this situation and whether my plan would be legal and not cause problems with the council or hmrc?

Thank you in advance!

[des8]

From :https://england.shelter.org.uk/housi...ng_from_family

You can get housing benefit or help with rent from universal credit if you rent a property from a member of your family who lives elsewhere.

You can only get benefits in this situation if your tenancy is a commercial one rather than an informal family arrangement.

You may have to provide proof of your tenancy, such as:

• a contract
• evidence of rent payments
• how likely your landlord would be to evict you

You may be asked if your relative took a tenancy deposit or provided you with a gas safety certificate before you moved in.

[AvgJoe]

Thank you, that's was my understanding too, but the specific question here is whether the fact that they sold the property to me previously is relevant or may cause issues in future should they live there as tenants rather than informal family arrangement, especially as claiming housing benefit?

As in, was the original solicitor who facilitated the sale just making a false remark or is there any truth to this?

[des8]

If a sale and rent back scheme was employed the council may refuse to pay any housing benefit unless your parents can show that was the only way they could stay in their home.
Also wonder how a claim for HB would be accepted as they would need to account for monies received from the sale.
Suppose it will depend on what questions the council ask and how they are answered!
If the council suspect dishonesty there could possibly be legal repercussions

Tagging lgfa92 for more info

[AvgJoe]

Thanks, the initial sale where I bought the house off my parents with their money did not employ any sale and rent back scheme. They continued living with me without any rental agreement formal or informal.

The remortgage is fully in my name and the lender said that the house should be tenanted with the LTB to fulfill terms of the remortgage.

Therefore I felt if I moved out into the new place as I should, and fulfilled the normal requirements for renting out formally for housing benefit, I could draft a tenancy agreement for my parents to live there and as they have no savings left and are of pension age, they could claim housing benefit?

Their savings and proceeds from sale went to pay off their mortgage on the house and weddings for siblings.

[des8]

Possibly.... wait to see if Lgfa92 has to make any comments or ask local authority how they perceive the situation