Rules for taking on a friend as a lodger whose on Benefits.

[Warren1]

I im relatively new to the forums but have been lurking for a while before needing to post and registering.

In simple terms im looking to take on a lodger, specifically a friend who has kids.

I shall explain my situation first then hers, then the problem!!

My Situation

I currently own my own 3 bed house and am in the process of medical retirement from my current job. This has left me with a pension that covers the whole mortgage and a few bills left over. Im intending to go to university as a mature student this year so obviously finaces will be tight!! my funding needs are covered by student finance, pension and taking on a lodger. This means i can just about manage on my current expenditure (been cutting down to realistic minimums and saving since knowing i would be retired) without working during my term time, with my savings of a few thousand as a back up for unseen expenses with me replenishing the cash on summer jobs for the next year.

Her Situation

She is a single mother with 2 children in reciept of housing benefit and income support and some form of tax credits. Shes been made homeless by her present landlord and despite the landlord breaking the law harassing her and failing to provide the correct notice she moved out into a hostel where she currently lives and will continue to live until she has been found/has found other long term accomodation.

The Problem

Having experience of hostels in the past plus knowledge of other friends experiences it is possible she could be living for an extended period of time in the hostel. (she was in one for 9 months on a previous stay!!). The restrictive lifestyle in the hostel does not suit her very well and does have a bad effect on her general mental well being.

Obviously its a bit of a lottery how long she may be there dependant on availability of alternative accomodation.

Being a good friend I want to help her out and would happily take her on as a lodger (her plan is to return to work once her 2nd child starts school in a year and a bit). Obviously in an ideal world and if i was earning id just take her on free of charge on an unofficial basis but quite frankly i cant afford to and she knows it hence her suggesting she could become my lodger.

Ive always planned to have a student lodger (or two) while at Uni to help with bills so already have informed mortgage company, dealt with insurance and also uni's policy for landlords. Im Also aware of the room scheme to enable me to earn up to £4k (ish i think) tax free from taking on a lodger. Ive got blank agreements etc all ready.

Ive also done some research on the HB rules and how she can still claim HB as a lodger in most situations.


Now being a relatively "war worn" individual and having heard and read lots of nightmare stories on this website and amongst friends i have some very real concerns i need to resolve before i take her on.

Primarily i want everything to be completely legal!!

I am aware that its illegal to make a tenancy agreement for the purposes of obtaining housing benefit but i think i am justified in this case as she doesnt live here and id already considered lodgers as a source of income so therefore i am entitled to charge rent to a lodger i take on. Is there any complications in this area???

Also what constitutes co-habiting or living with a partner? She is a friend, she is not a sexual partner or girlfriend. There seems to be a lot of stories recently of nightmares with HB and partners so i dont want to be accused of "mixing business with pleasure" when thats not the case. Id justify myself by saying as landlord its my right to select tenant and if the tenant happens to be a friend then so be it. Is this likely to cause problems???

Does taking on a friend as a lodger constitute a conflict of interests in legal terms???

Also as a lodger i presume legally our finances remain separate for benfit calculation purposes despite living in same house?? Im setting the rent at the same cost as what i would have charged a student for 2 rooms based on the going rates in my area and having looked up the LHA rates in my area the amount is a little bit cheaper than what she would be entitled to based on her and the kids ages. i dont want her to loose benefits and be financially worse off due to living with me as i am relatively speaking high earning compared to her.

My other major concern is that the DWP will take advantage of the situation and screw us both over using any reason they can to avoid paying her the benefits shes entitled despite keeping things legal. On this forum there seems to be a lot of people claerly entitled to benefit but with the DWP taking advantage of the situation as a way of avoiding paying.

Ultimately if it came to it i would not let her stay in the hostel beyond christmas even if it cost me money as quite frankly i dont think a hostel is a fit environment for a mother and 2 kids to spend xmas and grow up in and shes a friend so i want to help.

Obviously clever and manipulating people in DWP could easily contrive the situation and take advantage of our friendship.


Any advice you can offer???

[Conniff]

Get that word 'friend' out of your head. If she is signing a legal tenancy agreement, then she is not a friend, she is a tenant.

Ensure you do have a legal tenancy agreement for your own peice of mind and the legal powers it will give you if anything should go wrong, and it can.

[Esio Trot]

This lady will not get Housing Benefit, but instead Local Housing Allowance.

As far as I can see, she will be awarded benefit, but what deductions might be made due to the utility bills and council tax being included, I don't know.

May I suggest that you contact Shelter. They are really good and can advise you on this and whether it will be worthwhile for you and the prospective lodger.

[Warren1]

cool thanks for the advice!!

So as long as i keep things "official" with her as a tenant then my other concerns arent too big an issue??

I shall look at the shelter site!!

Cheers for clearing up the LHA/HB thing!!

So they wont try and screw things over once shes moved in???
Or is that where deleting the word "friend" protects me and her??

[Conniff]

Is this spam from a UK I.P. Mods???