But because we now have a rent free property that in theory we could live in (council don't normally regard kids needing their own room until they are much older) they would stop everything?

Hello all, I am looking for some advice on my situation please? My partners dad recently passed away and left her his 1 bed flat, with no mortgage. The flat was an ongoing project by hime which needs to be finished. At the moment the flat is not really habitable. I'm self employed and only earning around 12k per year (probably 7k after expenses) we live with our 2 children aged 1 and 2 in a 3 bed house we privatly rent. The rent is £950 per month and due to my low wage and prtner not working we get housing benefit, council tax benefit and working tax credit. I obviously need to declare our new property, our plan is to finish the work and rent it out, using it as a foothold to start a business, renting this flat and then re-mortgaging to buy another place to rent that one and so on and so on. When I inform my local council of my new situation will they stop my rent and council tax beneifits? And do I need to tell working tax credits too? Any help or advice would be appreciated, I'm losing alot of sleep over this!! cheers