Terms & Conditions

[dyoung]

Hi all,

 

I was wondering whether I could get your thoughts and collective wisdom on this one…

 

Claimant is a pensioner in receipt of PCGC and currently living in a HA property (paid in full, less £20pw or so services). He has put in a change of address form in advance to see whether we would pay HB on the property that he wants to move into on 01.12.17. He is seeking to move as he feels insecure at his current property and believes that remaining in this property exacerbates his anxiety and stress. The property that he wants to move into is a two bedroom bungalow owned by his daughter and son-in-law, who themselves inherited it from the son-in-law's parents last year after they had both passed away. The property has been fixed up by the daughter and son-in-law in the interving months and has been empty and unoccupied whilst the work has been going on; the property does not have a history of being rented out.

 

As per the tenancy, the rent is being charged at £1100pcm, however the LHA rates in the area £746.37pcm. The tenancy agreement that he has provided is unsigned but confirms the start date of 01.12.17 and the rental charge as detailed above. When asked about how a pesnioner on PCGC with little to no savings would be able to afford the £353.63pcm shortfall between the max HB award and the total rent, the daughter has said that her son will act as guarantor for the claimant and pay this shortfall indefinitely. The daughter's son is not listed as guarantor on the tenancy provided, nor is any guarantor listed.

 

I believe that there is a genuine liability to pay rent in that the daughter and son-in-law had to take out a mortgage on the property once they inherited it as only 40% was left to them. This rental liability would therefore be there to enable them to pay their remaining mortgage on the property off using the rental income received. However, we cannot decide whether this is payable for HB purposes. The tenant clearly cannot afford the rent, and this is further muddied by his grandson being the guarantor for the shortfall to cover his own mother and father's mortgage. Conversely the owners need to rent this out as this is (at least) their second property and they need to pay their mortgage. They have stated that they would rent the bungalow out to another person or persons should we decide that we cannot pay HB on this property for the claimant currently. I am concerned that the grandson wasn't listed as a guarantor on the original tenancy and this has only been mentioned as the solution after we asked further questions rather than part of the original proposal.

 

Does this fall foul of commerical/contrived tenancy under HB reg 9? Many thanks in advance for your input.

 

Cheers,

 

Dan

[jason squire]

I'd have no problem putting this into payment. The response to the shortfall is obviously just the tenant trying to tick the right box with you. On the whole, though this looks to be a typically commercial rental scenario. The landlords are prepared to take the hit on not achieving market rent in return for a tenant that they know will look after the property. I'd want to keep an eye on who moves into that second bedroom (if anyone does) but otherwise it sounds pretty legit. 

There's the numerous threads with Peter de la Mothe's advice regarding gas and electricity safety certs etc and it makes sense for you to request these to reassure you that a) your tenant will be moving into a safely renovated accommodation and b) that the landlord is treating this as a commercial venture.

[dyoung]

Thanks Jason. I'd been looking through some of Peter's older posts, but just wanted some feedback on the guarantor situation. For what it's worth, the daughter said that no one else would be living in the property; the second bedroom would only be for her when she stays over occasionally to look after her father (no AA and not often enough to consider additional room for overnight carer). I'll write out for the safety certs though for our records. Ta.

[jason squire]

'the second bedroom would only be for her when she stays over occasionally to look after her father'

 

Keeping a room available for the landlord… who is a close relative.

No further comment on it other than that is the part that I'm least comfortable with.

[dyoung]

Given the irregular and often infrequent nature of these overnight visits, do you think it has an effect? The daughter currently stays on the couch in his current 1 bed HA property when she stays over so there is an established history of caring for her father through the night when the need arises. Her main residence remains elsewhere in the borough which our Council Tax records confirm.

[sbenson]

I wouldnt be happy paying this. There may well be some form of liability but is it commercial and has the liability only been created to take advantage? I would make a good case for this especially in light of the landlord staying over in a carer capacity. Initially I would not give a decision either way as he hasnt moved in. I would write to this effect and maybe give some advice on what a commercial tenancy is and isnt including the landlords reponsibilities.

[churdle]

My initial thought would be that you cannot make any decision or make any assurances until they move in.  Might be worth pointing this out to see if this changes anything.

Also, the landlord may well be caring for her father currently and may well do so if the move happens but would this be the usual actions of an arms-length commercial arrangement?

[jason squire]

I'm still leaning towards paying. The provision of the care is seperate to the provision of the accommodation (from what you have said, whether claimant moves in or not will not change how much care the daughter provides to him). Just depends on how you interpret 'regular'. There are users on here that would see this provision as regular enough to exempt the claimant from bedroom tax- not strictly relevant for this decision but might be worth considering if you're debating the residence of the landlord.

To say that you cannot make a decision on this claim until the move occurs seems a little unreasonable in my opinion. You can't expect the tenant to give up a secured tenancy with a RSL to move into private and for him to hope that you'll find in his favour. To me this looks like one of those 50/50 cases where you can argue one way or the other and for me, when there's a good enough case to pay the benefit then there's not a good enough case not to.  

[mickbullock]

I think the liability itself could be questionable (as there appears to be a lack of evidence regarding the grandson being guarantor) if you decide the liability exists then the commerciality is questionable as would the arrangement for the shortfall be accepted for a tenant who wasn't a relation and is it more of a friendly arrangement than a commercial one. It's a complex area and there is inconsistency between LA's (and tribunal judges) in decisions. You just need to consider all the factors in reaching your decision.

However, I agree with Jason, that to be fair to claimant, you should be able to make a decision (either way) prior to them moving in.

Hope this helps

Mick

   

[sbenson]

Will the Regs allow you to make a decision in this case at this stage. The father is still a tenant of the RSL and occupying that address? I'm guessing if he had a negative decision he wouldnt move 

[churdle]

Given the making of an award is conditional on a person occupying (or being treated as occupying) a property I dont see how a decision can be made until the person moves in.  I see no reason why you cannot question them about the arrangement prior to that.

[david farrar]

The DWP advised in A22/2008 that:

You are unable to make a decision or any declaration about the likely outcome of a future claim to benefit. This is particularly the case where the dwelling has not been acquired and the person therefore has not occupied it and where there can be no liability. LAs do not have power to make a decision on an award of HB in these circumstances. To do so would leave the authority open to litigation

You have a responsibility to advise how the HB scheme works and when appropriate how the particular regulations may work in an individual’s circumstances should a claim be made. You could give an indication of the likely outcome of a claim but this would have to be limited to known facts without any promises attached.

Although the advice related to supported accommodation, I believe the same would apply here.

[d-stainsby]

You simply cannot make a decision at this stage and even if you made a negative decision later, it could as we know be challegned at a Tribunal.

I have posted several times on situations similar to this and for what its worth I see  no reason why it should not be paid once there is a legally enforceable  liability

[dyoung]

Thank you all for your feedback and input. I'm thinking then of writing back to the claimant to say that we cannot give a definitive yes/no until the move in as per DWP guidance (cheers for that one David), however based on the circumstances detailed it is likely that we could pay upon the commencment of the tenancy and his residency. Personally I am inclinded to allow it if he moved in based on the information provided to this point and your collective thoughts on the subject. I guess by not giving a categorical 'yes' on this we will then see whether this affects their decision on the move and, in a roundabout way, answers the original questions regarding the commerciality of the tenancy itself.

[peterdelamothe]

This is very much a 50 50 case. Don’t forget they also need to fit fire alarms have a epc check and the furniture must meet safety standards…and they must be licenced as a landlord if this is relevant in the area. I guess they will have all this in place though. It all sounds fair enough to me in principle although you could certainly make a strong case that no commercial landlord would look after the tenant in this way. It all becomes very muddled. Just on the gas certificate issue…a number of tenants have been killed this year by amateur landlords not getting gas boilers checked. None of them have used an agent it seems; family arrangements often. It’s a criminal offence not to do a yearly check these days…perhaps by demanding these in this type of family style arrangement hb staff will stop a few of these tragedies as a by product of reg 9 investigations!!

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