Updating post from Reddit.
Hi all,
I'm thinking about letting some of my distant relatives stay in a spare rooms I have, and they would be paying rent while claiming housing benefits. Since this is my first time doing anything like this, I was wondering if i could get help on few questions:
Any advice or experiences would be really helpful!
Many Thanks
Update: i own the property on mortgage.
Don't. Business and family rarely mix well.
Also benefits usually frown upon family landlords so potentially you would need to make sure they don't stop when a tenancy is started.
Don’t some mortgages prohibit this?
Yes. The EU made it "illegal" for a Mortgage Lender to offer standard Buy-to-Let Mortgages if its rented to family members. So few lenders offer this facility, it would be called a "Regulated Buy-to-Let" and require a remortgage.
We didnt get rid of this rule when we left the EU.
The EU's theory was if you are renting to family, you will be doing it cheap or free. So you have to understand a full affordability test, you cant base the affordability on rental income as you owuld on a normal BTL.
This is not a buy to let though. He says spare rooms so they would be Lodgers.
https://england.shelter.org.uk/housing_advice/benefits/claiming_benefits_if_you_rent_from_family will give you some information.
Do you own your home, rent it, or have a mortgage on it? If it's either of the last two then check your terms.
If it's below the limit for the rent a room scheme then you won't be paying tax on it.
You may need to register as an HMO depending on how many people you're planning on renting to.
2) Any kind of rental, you need to check your mortgage allows for rental.
3) If they are only renting a room (ie lodgers) you don't strictly need one but it’s a wise move to have one.
4) Not sure about their claims for HB, i think for your letting purposes it doesn’t matter to you?
5) Yes there are still rules; you need a gas safe cert for example if you have gas.
6) As long as you're under the rent a room scheme then no you don't need to declare your income.
If you have not rented the room out before UC will NOT pay the rent.
They will only pay if you can show that it is a property/room that you have and will be renting to someone else. Even then it is at their discretion.
I wouldn’t do this if I were you.
Don't. Just don't.
They will cost you money. They will not thank you.
They will probably slag you off for being a greedy landlord.
Thanks all for the comments, really appericiate and back to thinking and discussing with family.