contrived or non-commercial ~ Can we Pay ?

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  • #31642
    emm
    Participant

    I have an appeal wehere we have refused HB on the basis that the tenancy was contrived

    Claimants mother-in-law purchased property outright so claimant could move to area – he was in the process of selling his former home but as soon as the sale went through his intention was to purchased his dream home back from the mother-in -law

    over the next 6 months there were delays and the buyer fell thru and then he lost his job. When he lost he lost his job, the only source of income for his mother in law would be rental income, and so a tenancy was created ( up until that point no rent or contribution for living in the property had been exchanged) . Claimant tells us he has begun paying rent at the beginning of each month until he is in a position where he can continue with the purchase.

    i believe the claimant is genuine – we can see payments from his account at the beginning of each month and rental income is in the region of what his mortgage payments would have been. He’s able to pay the rent even though he is unemplpyed becuase he still has proceeds from the sale of his former home

    i don’t see that the tenancy was contrived- it came about because of the change in circs and up until that point he has proivded evidence which suggests he had every intention to puchase the property.

    But the tenancy appears to be a family arrangement – only in place until he is in a position to buy the property – to this end it doesnt appear to be on a commercial basis . The claimant tells us that his savings are running out and unless his LL receives rent she will eb left with no choice but to sell the property

    Any opinions as to whether you would pay of not would be welcomed

    #88481
    peterdelamothe
    Keymaster

    I think this is the type of case that will divide opinion! It is also the sort of case that different Tribunals will make different decisions on.

    It sounds to me that you are correct in that the only real issue is the relationship between landlord and tenant. The claimant has given you the correct information, is paying the rent and has some form of tenancy. But then we run into this “family” tenancy issue. I know what you mean; if the property is sold the tenant will move out whatever his rights under the tenancy and so on.

    Without having all the facts and a “feel” for the case it is a close call.

    I would add that just sometimes claimants provide too much information about their family arrangements or to put it another way, Housing Benefit Officers sometimes get a little more information than is good for them to know. 8) 😆

    #88482
    Anonymous
    Guest

    [quote:28c0f53c56]over the next 6 months there were delays and the buyer fell thru and then he lost his job. When he lost he lost his job, the only source of income for his mother in law would be rental income, and so a tenancy was created ( up until that point no rent or contribution for living in the property had been exchanged)[/quote:28c0f53c56]
    Correct me if I’m reading this wrong, but are you saying he wasn’t paying any rent to his mother while he was working, but as soon as he lost his job his mother needed to start charging him rent? Had there been a change in the mother’s circumstances that meant she needed to start charging him?

    I agree it might be a close call at tribunal, but I’m pretty sure I know what my initial decision would be.

    #88483
    emm
    Participant

    He didnt pay any rent for the first six months because he tells us that he had every intention to purhcase the property as soon as possible , his mother in law didnt have a mortgage on the property and so she allowed him to stay there rent free so to speak so he could save up for a bigger deposit when it came time to purchase – when he lost his job and knew he would be able to purchase the property anytime soon – the decision was made for him to pay rent

    #88484
    peterdelamothe
    Keymaster

    Emm – that might count against the claimant in trying to establish a proper landlord / tenant arrangement but not by that much. I think you have to make your decision either way on what you think can be justified.

    #88485
    Anonymous
    Guest

    So I take it the proceeds of the sale of his previous home where not enough to buy out the mother? He would have needed a mortgage, and losing his job has meant he was unable to get one?

    In that case I take it he lost his job before his former home was sold?

    I also take it the proceeds of sale and any redundancy pay do not push him over the capital limit?

    (This is why its hard to give advice on reg 9 situations – you really need to take all the evidence into account and it cannot always be conveyed in a couple of messages)

    I would still want to know why the mother felt the need to start charging rent – she bought the property outright and had no intentions originally to use it to derive income, she presumably has enough to live on without charging rent, obviously has a close relationship with her son and was happy to help him out in this way, so why start charging rent now?

    #88486
    emm
    Participant

    I know these decisions are always hard –

    After he moved in, his buyer fell through so he was still paying a mortgage on his previous property until Feb , when it sold. He was still employed until the end of May but the proceeds from the sale of the cl’s former home were only 5% of the purchase price So when he lost his job, rather than sell the property again -the LL agreed to rent the property to the cl until he was in a position to continue with the purchase –

    Although the LL had enough capital to purchase the property outright – he tells she has no other income – hence the need for rental income

    #88487
    Anonymous
    Guest

    [quote:59fc07bcbd]Although the LL had enough capital to purchase the property outright – he tells she has no other income – hence the need for rental income[/quote:59fc07bcbd]
    But why is she only charging her son rent from the date he lost his job? Why not before? And how was she supporting herself back when the son first moved in?

    I think you need to establish the mother’s and son’s intentions when they first decided to buy the new property. If the son had practically no equity in the property he owned how did they expect him to buy the new place back off the mother? A tribunal may be the best place to get to the bottom of this – and that would mean making an initial decision to refuse HB.

    #88488
    emm
    Participant

    Many thanks to both of you ..sound advice , you’ve certainly given me something more to think about before making a decision

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