Housing Benefit for rented house because can afford mortgage on owned property

[Kai-Boshed]

This is not as tricky as it sounds, but it seems impossible to the benefits agency to deal with.

 

A relative moved out of their owned home because they could not afford the mortgage £650 (interest only) - so this house has been rented out to a family for over 2 years, the rent almost covers the rent (my relative has to add about £50 to the mortgage each month) Relative is in negative equity so can not sell.

 

My relative now lives in a private rented house, for £450

 

Now my relative is unemployeed (made redundant 3 months ago) and they have not recieved a penny in housing and now faces eviction.

 

The wont pay hosing benefit because she owns a house.

 

It seems they only possible way to resolve this in their eyes is the most foolish one - stop paying the mortgage on the owned property, so it is repossessed and the tenents are evicted. My relative really does not want to do this - but what are the options? No one from the authorities seems to have a clue how to deal with this and the latest is that she is not entitled to any housing benefit for the house she lives in whilst she has another rented out - even though she makes no profit on this, and is even renting it out at a loss.

 

Can anyone please help. They have tried citizens advice, but they basically said they can not help with unusual cases such as these.

Edited April 7, 2009 by Kai-Boshed

[citizenkain]

Are you being serious? do you really think its ok to own a house even if it is on mortgage,rent it out to someone,move into another rented house,then,when you get made redundant the taxpayers are gonna bail you out??the benefit agency is there for people that are down on their luck,not to be manipulated by people.

If that were possible I would be doing that myself and so would everyone else.

[Bazooka Boo]

IMHO I would inform the tenants to find other accommodation as she is being evicted from her private rented accommodation. That way then she 'may' be entitled to some form of benefit, even if it is only JSA. People on benefits don't choose to ask for financial assistance, nor do we expect to be bailed out in order to allow us to live in luxury.

The system is there to assist those who are unfortunate but lucky enough to just about have a roof over their heads and a bed to sleep in, the more they are inundated with reckless spurious claims, the harder it makes it for those who are genuinely in need of help.

I do not think that your relative is any where near asking for monetary benefits, which is possibly why other agencies are reluctant to offer any help.

By all means information regarding her house which she rents out with which she is struggling with? I am sure people on here can advise as to the best course of action, but again it is my own personal opinion as you have stated, she couldn't afford the 650 a month Mortgage, but for the last two years, has rented another house, pays 450 a month for that, aswell as topping up the mortgage by 50 quid

A simple budget plan would be my first start, and then looking at what costs I can cut down on

[surprise]

My daughter is a HB Contractor and this is the official LA view

 

the LA was correct in its decision not to pay housing benefit - your relatives will have to move back into the house or sell the house - if however they decide to sell the house then the LA can disregard this property for up to 26 weeks (can be longer under certain circumstances).

[Kai-Boshed]

Thank you to the people with helpful replies.

 

As mortgage advisor basically saw my relative coming, getting them to get £20k cash back - £10k went to them, £10k to my relative, dont ask why. So the house now is about £20k negative equity, so selling it isnt possible, unless an unsecured loan is taken out to cover the difference, something relative is unable to do (redundant).

 

The reason behind moving out of mortgage house was because the rent on a small house is less than the mortgage. So the house is rented to DSS tenents which almost covers the mortgage.

 

I can only assume citizenkain doesnt understand the situation - my mum gets no benefit what so ever from the mortgaged house, in fact it costs her £50 a month to have tenants in it, and as i said it was interest only, no capital is built up - do you understand how interst only mortgages work?

 

As selling the house is not possible, what do you suggest? I am sorry I dont understand why moving back in would help as the mortgage costs more than the rented house? It seems like this would be going from bad to worse?

 

I have suggested trying to get the mortgage advisor to return the £10k which I have no idea why they got that much for setting it up and seeing if the lenders will let her sell it at a loss? The only other way I can see it going forward is if they let it by voluntary repossessed?

 

It was originally recommended on the shelter website that if you cant keep up with your mortgage, moving to a cheaper rented house and rented out your mortgaged house is a good idea. Obviously this is very bad advice in hindsight - because you are high and dry if you loose your job. My relative has worked literally all their life, from aged 15!

 

Surprise, thank you for your help - does your daughter happen to know if their is any sort of appeal process? I very much doubt the mortgage advisor will offer any help, as they have changed business name since.

[kk3852]

I really dont know how to answer you ---yes, there will be an option to make an appeal against the refusal to pay housing benefit BUT - the regulations are laid down. Housing benefit cannot be paid when another property is owned.

 

I understand that you say that your relatives cannot afford to pay the mortgage on their own property but they need move into their own property,claim income support and then in time they will qualify for interest payments on the mortgage.

 

The way that it is working at the moment, there is a family in the owned property receiving housing benefit which is more or less paying the mortgage. At the end of the day the tax payer is providing your family with a property which is only costing them £50 a month and which they are free to sell at any time.

 

Your thoughts that the only option would be to allow their property to be repossessed is flawed - they could be treated as still owning the property as they have deliberately deprived themselves of it.

You have to see that housing benefit is to pay to provide accommodation for people who cannot provide one for themselves, it is not to pay for a second property when another one is owned and that is habitable and livable.

Edited April 8, 2009 by kk3852
To add some more !!

[surprise]

I honestly don't think you would get anywhere by appealing my daughter actually read out the guidelines from their Regulations. She will be entitled to benefits having been made redundant and on this score it may be best to see the Welfare Officer at your local authority. I don't think there is going to be any miracle solution to this problem. However, personally I think she needs to move back into her own property she may stand a better chance of help that way rather than the present set up.

[ErikaPNP]

An appeal on any benefit decision is only ever overturned if the original decision was wrong, i.e did not take into account the facts of the case in accordance with the relevant legislation. If the legislation was applied correctly, an appeal won't overturn the original decision.

 

For example: 1. Claimant A is in reciept of Jobseekers Allowance (Income Based) makes a claim for housing benefit. The person resides in his sisters home who charges him rent money for his room. The Local Authority refuse housing benefit because the regulations stipulate that a person who is living in the same dwelling as a close relative cannot receive housing benefit. (Regulation 7). An appeal will not change the decision, as it has been made in line with the relevant legislation.

 

2. Claimant B rents a property from his sister. His claim for housing benefit is misunderstood as living with a close relative and as such it is declined. He appeals the decision and the appeal overtuns the original decision as the original decision was incorrect he is not residing in the same property as the close relative and has a legally binding commercial rent agreement.