Landlord Knowledge - The Home of Savvy Buy to Let Property Investors

Letting to a Relative

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It is said that everything is relative, but one of the hardest things I used to find to explain was why, where a property has been left empty, because it was inherited or to enable a family to move on, it was not possible to let it to a close relative if that relative was dependent on state benefits. 

Those difficult conversations were brought to mind when I was asked about a situation where a woman wanted her daughter to move into what had been her mother’s house which had been left to her. 

The daughter did not work, having two very young children and therefore relied on her benefit. The property was a very nice three-bedroomed house, which one day would have been the size of property she needed having children of different genders, whereas at present, she is in a two-bedroomed council property in what she perceived as a ‘rough’ area.

The woman had no intention of renting it to anyone else, as she wouldn’t trust anyone to keep it in the same state; she would only ask for the same rent as her daughter paid for the social rented property, which was about £250 per month less than market value and this would release a property back into the housing stock. It made sense, to her, at a time of housing need that she should rent to her daughter.

It did not occur to her that, should she die, the daughter would be liable to inherit (without other siblings) the property which the Department of Work and Pensions, through Universal Credit, had been paying for. 

It could not be considered a commercial tenancy, which was proved by the fact a commercial (market) rent was not asked for and if the daughter did not move in and pay some rent, the property would be sold, rather than be used to generate income as a commercial tenancy.

I had to advise that in these situations, the arguments that could be made for allowing this would not apply. If the property had been rented previously, with proof provided by copies of previous tenancy agreements, with a commercial rent having been charged and continuing, a strong case could be made – though as the daughter was not entitled to the three-bedroomed rate of local housing allowance, this might be questioned. 

If the let was handled by an agent who, having taken all the necessary references, chose as the tenant the estranged daughter of the owner, again a case could be put, though the DWP are unlikely to be so naive that they wouldn’t see through this and still refuse the housing element of Universal Credit.

We can all understand why we would prefer to see our child settled in a nice home they are familiar with; most people would gladly do the same for our children. But that doesn’t mean that those of us without the benefit of inherited properties should be expected to pay to allow this for those that do. 

If your relative is working, let them rent the property for whatever low rent you will accept; that is your choice, just don’t expect the DWP, and that’s you and me, to pay.

For advice on buy to let issues – General Knowledge