Local Government Welfare Reform and Homelessness

BLOG: Renting to family members: Councils still denying legitimate claims

Bill Irvine
Written by Bill Irvine

A few years ago, the RLA published an article, relating to a tribunal case I had represented in, where the landlord was a concerned aunt, who provided a tenancy to her young pregnant niece, who didn’t have the means to secure a tenancy for herself.

The case highlighted the sometimes difficult task of convincing councils that there is nothing illegal, immoral or contrived about renting property to close family members, whilst claiming Housing Benefit (Local Housing Allowance).

I explained, at that time, how I dealt with cases of this type, on an all too frequent basis and was usually able to overturn most council decisions, because they’re invariably flawed.

Well, I found myself, dealing with another such case, this time, involving a mother and daughter, where, yet again, the council concerned, denied entitlement, this time, without even properly considering the facts.

Thankfully, the First-tier Tribunal Judge, who determined the case, set aside the Council’s decision, after systematically demolishing the Council’s arguments as I sat quietly looking on with my clients.

The Facts

The 30-year-old daughter had three young children, the youngest only weeks old, when the father deserted the family.

Stuck in a first floor, tiny, two-bedroom flat, with no lift and no garden, she set about looking for a new tenancy.

Despite her best efforts, she couldn’t find one, in decent condition, at an affordable price.

Her mother, who was helping her with her search, decided to apply for a buy-to-let mortgage and when this was approved, bought a new home specifically for her daughter, and grandchildren to live in, only minutes away from the kids’ school and within easy reach of the mother and two brothers, who all assisted her raise the young children.

To pay the rent of £1,000 per month, the daughter assumed she’d qualify for partial Housing Benefit (LHA) as she was receiving help with some of the rent at her previous address, which was £1,150 pcm.

Her mother phoned the council’s housing benefit section and was advised, if the daughter produced a tenancy agreement, with a rental charge, based on market rates, likely, an award of  housing benefit would be made.

Making the Housing Benefit Claim

So, taking on board the council’s advice, she approached a local letting agent and asked them to construct an AST for the £1,000 pcm.

Both mother and daughter signed, and the agreement was duly witnessed. The daughter submitted her claim, accompanied by the AST and sat back fully expecting her application would be approved.

The next thing she received was a questionnaire, asking her a range of questions, about why she had taken on the tenancy and what would happen if LHA wasn’t awarded.

She responded by confirming her part-time earnings would not allow her to meet the contractual rent herself and her mother couldn’t afford for her to live there rent free, so, if LHA was refused, she’d be forced to vacate, and her mother would then, most probably, sell the flat.

Her mother also confirmed this, by stating she’d need to serve notice and repossess the flat.

Only three days after submitting the completed questionnaires, the council confirmed in writing, they considered the tenancy was not on commercial terms and was contrived to abuse the LHA scheme.

Appeal

Shocked by what had happened, the daughter and mother asked for a full statement of reasons and, while doing some research, came across the RLA’s article, and contacted me.

When I received copies of the exchanges between the Council, daughter and mother, I created a very detailed appeal submission, for the daughter to sign and forward.

On receipt of this, the council sent out further questions for the daughter and mother to answer.

I helped them construct their respective responses, fully expecting the council would eventually see the merit in the daughter’s claim and concede the appeal.

I couldn’t have been more wrong.

Instead, the council sent out a further batch of questions, which they claimed had been overlooked.

I responded on behalf of my client stating, she would not be submitting any further evidence and insisted on the case being referred to the Tribunal Service.

The council complied, but in its submission, suggested our unwillingness to provide this additional information, cast doubt on the authenticity of our earlier responses and denied the Decision Maker the chance to revise his decision, asking the Judge to effectively “strike out” the appeal.

The Judge did not respond to the council’s suggestion but instead set a date for a hearing and demanded the council send along a representative.

(You might find it surprising, but nowadays, its quite often the case, councils fail to turn up at the Tribunal Hearing, relying instead on their written submission.)

Tribunal Hearing

After the usual formalities, the Judge asked the council officer to explain why he considered the tenancy agreement was non-commercial in nature and why the council believed the claim for housing benefit had been contrived to abuse the scheme.

The council’s officer immediately raised the white flag, in respect of the second question, leaving only the question of commerciality to be determined.

The Judge then proceeded to suggest to the Council’s representative:

  1. There was nothing unusual about the AST; it had been constructed by an experienced Letting Agent; its terms were the same as applied to its other tenants;
  2. The rent was pitched at the rent suggested in Rightmove; part payment of the rent had already been made by the daughter and evidenced by bank statements; it was lower than the rent she had been paying at her earlier address, for a property much smaller and less suitable as it was a second floor flat with no lift nor garden for children to play etc.
  3. Before taking up the new home the mother had consulted the council on the question of HB being appropriate and the daughter’s income from part-time earnings would justify an award.
  4. Additionally, the Judge referred to the points I had made in my written submission regarding HB regulations and related case law from Upper-tier Judges.

The council officer rather than try and argue the toss, pulled out the white flag again, effectively conceding defeat, to which the Judge proclaimed – Council decision set aside, appeal succeeds, backdated to the date of claim – April 2017 – letter of confirmation to follow.

Unsurprisingly, both mother and daughter were delighted and much relieved by the outcome.

The award, backdated to the date of claim, will wipe out all arrears, owed to the mother, with the surplus going back to the daughter to help clear a bank overdraft facility she’d used, to help make payment towards the rent.

More importantly, the council was taught a lesson – claims for HB/LHA, made by family members are perfectly legal and above board; the questions of liability and commerciality, should be properly discussed and agreed, between the parties, in advance, of the AST being signed and each party comply with its terms.

Anyone wishing any further information on this topic can contact bill at bill@ucadvice.co.ukor phone 07733 080 389.

About the author

Bill Irvine

Bill Irvine

Bill has quickly become known as a very effective Welfare Rights Advocate. He has been involved in most of the major social security changes since the early 80’s when Housing Benefit was first introduced. As well as offering advice and assistance to landlords, primarily in the RSL/PRS sectors, he also provides representation when disputes can’t be resolved through negotiation and where they have to be progressed through the formal tribunal process, initially to First Tier and, if necessary, through to Upper Tier level where some of his cases have proved to be of national importance to disadvantaged groups.

3 Comments

  • Wonderful to see common sense prevail.

    While it’s not relevent to the principle being defended, I don’t know any BTL lender who would allow a family member to live in a property funded using a BTL product.

    So it’s likely that, at minimum, the mother is breach of her mortgage terms and, worse case has made a fraudulent application (sometimes the question is asked directly, sometimes it’s hidden in the terms and conditions you sign to confirm that you’ve read).

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