interview under caution housing beneift

[mte]

Hi, I have had an IUC this morning and it wasn't very nice. I have been accused of hb fraud as they are saying my tenancy agreement is not on a commercial basis. The property is my mum's and I stated this on the original claim form. My mum helps us out by paying for various activities for my children one of which is dancing and is very expensive. I was supposed to be paying £750 per month (HB allowance £645pm) but on a number of occasions have paid less as I had to pay dance fees, school trips etc. I honestly didn't realise I was doing anything wrong otherwise I would have paid the whole rent and then got my mum to pay the fees direct to the schools. I said at the interview that I agree I have been overpaid but it was certainly not intentional to commit fraud. They asked questions that were nothing to do with the tenancy arrangements. We had a one bed flat a couple of years ago which was included in our Bankruptcy and was put on the HB form. It was repossessed in 2010. They asked why we didn't live in it?? They are talking about interviewing my mum about this, she will be really upset by all this. What do you think will happen next, I am worried sick. I really appreciate your help, thank you.

[rebel11]

Hi mte

 

Welcome to CAG

 

The guys will be happy to advise as soon as they are available.

 

Thread has been moved to the correct forum.

[mte]

Please can someone give me advise, I am still waiting to hear from the Council. Anyone know what might happen?? thanks

[kk3852]

I think that it will depend on whether or not the rental agreement can be considered to be a commercial tenancy. Is this a property that they owned before you moved into it and had previously rented out to someone else, or was it bought purely so that you could live in it.

 

Your mum may have to show that this was a business agreement and not that she provided you with a house so that any mortgage that she had would be paid by the HB

[mte]

Hi, thanks for your reply. I found some documentation stating:-

 

 

Regulation 9(1) Contrivance.

“ It should be remembered that contrived tenancies are those that have been created by the tenant and landlord to abuse the HB Scheme. As such, contrivance cannot apply where the main reason for entering into the tenancy was to provide a home for the claimant and their family”.

“ It is important to remember that a claimant’s financial circumstances may mean that they experience less choice in the housing market and have less bargaining power. Agreements made between friends or relations often come under close scrutiny. Whilst the relationship between landlord and tenant is an important consideration it does not in itself indicate contrivance. It is quite reasonable that a landlord may choose to rent a property to someone they already know.”

My mum bought the property in June 2011 as she was going to do it up and sell it. I then told her about our bankruptcy and pending house repossession (Dec 2011) and she said we could rent from her. All this was declared on the HB form and wasn't questioned. We had a tenancy agreement. It wasn't rented to anyone before us and when we moved in it still wasn't finished. We couldn't rent through an agency as we were bankrupt and unemployed. We would have been homeless.

Who makes a decision about this as I haven't commited fraud, just need a home for the four of us. Thanks

[id6052]

There are a number of possible outcomes.

 

The HB decision maker may decide: -

1) that you have a rental liability which is eligible for HB

2) that you do not have a rental liability and it is a sham

3) that you do have a rental liability, but it is not on a commercial basis

4) that you do have a rental liability, but it has been created to take advantage of the HB scheme

 

In decision 1) you would continue to receive HB.

In decision 2) to 4), you would cease to be entitled to HB.

[mte]

ok, thank you. If they decide 2) to 4) will they prosecute me for fraud?

[id6052]

Whether or not they would attempt a prosecution would depend upon facts of case, for example, whether or not you or your mum made false statements, or concealed/failed to notify relevant information.

 

Such cases can be very difficult to prosecute unless there is overwhelming evidence against you.

[mte]

Ok, we did everything above board, not lied about anything. I will just have to keep my fingers crossed and wait

[Life-Goes-On]

What they will be looking at are such things as is if your mum has a history of of being a Landlord, either a property she has let over time, or multiple properties.

This could show 1)

 

If it is her first time, and had no other tenants than yourself, then they could decide 2) to 4)

[id6052]

there are a number of factors that the HB decision maker may consider, these would often include: -

 

• the amount of rent charged, is it higher or lower than normal
  
• relationship between landlord and tenant
  
• evidence of rental payments being made
  
• intentions of the parties
  
• whether agreement is arms length
  
• any non-enforceable terms
  
• whether landlord has rented other properties or this property before on a commercial basis
  
• what action the landlord has taken or would take on non-payment of rent
  

[mte]

my mum received a letter yesterday which was about her "appeal" and asked what the £19,000 loss is on her tax return (it's the cost of renevating the property when she first bought it) Is her mortgage residential or buy to let and does she have landlord insurance, which she does. Why do they want to know about the loss on the tax return please?? thank you

[kk3852]

I would imagine that they are asking about her tax return to see if she has declared a business to the Inland Revenue - that business would be as a private landlord.

[mte]

Hi, yes she did as all the rental income she received is on the tax return, I assume that's a point in her favour?? thanks

[mte]

Had a letter from decision maker today saying that he agreed the tenancy isn't contrived but can't change the decision saying the tenancy is on a non commercial basis. My mum is worried about why they are asking about the loss on her tax return, and about her mortgage especially since I had a letter with a decision. Anyone know what will happen please??? thanks

[impecunious]

I was in a similar situation when I rented my daughter's house. Whilst looking for work, I claimed JSA, Council Tax and Housing Benefit. I had to prove, beyond a shadow of a doubt, that it was a commercial relationship. I told them that if my rent was late or unpaid, my son-in-law would have no hesitation in taking legal action to evict me! Proof enough to confirm a commercial relationship, plus tenancy agreement of course.

 

 

Just thinking, did you mother advise her mortgage company that she was letting out the house to a close relative?

Good Luck!

 

 

Impecunious!

[mte]

Hi, thanks for your reply. Did they let your claim go ahead?

 

My mum didn't tell the mortage company as it didn't even occur to her or me that she had to. The mortgage was obtained through a broker.

[id6052]

was it a 'buy to let' mortgage?

[mte]

Hi, no it wasn't because the broker said as she didn't have a mortgage on her own house it would be cheaper on a normal mortgage.

[id6052]

That factor might go against you, however there are a lot of factors that need to be considered

[mte]

Am getting more confused by the day!! I received the letter saying the tenancy isn't contrived but he can't change decision about non commercial tenancy - I am appealing this decision. On the same day my mum received a letter from person who interviewed me asking questions about what the loss is on her tax return (cost of renovations), what the professional fees were (for accountant to do tax return). Does she have landlords insurance (yes she does and sent them a copy). I don't understand how if they say a tenancy is not on a commercial basis that it's fraud. Anyone know what will happen please?? thanks

[impecunious]

Hi, thanks for your reply. Did they let your claim go ahead?

 

My mum didn't tell the mortage company as it didn't even occur to her or me that she had to. The mortgage was obtained through a broker.

 

 

Yes, my claim for housing benefit was successful. They only paid a portion towards my rent as the house was deemed "too large for my immediate needs" -- it was 2 bedrooms and I live alone. That was 6 years ago, so not a new rule. Thankfully, I was only on JSA for 13 weeks until I found a full-time job.

 

Under the provisions of the mortgage, my son-in-law was meant to inform the mortgage company that a close relative was renting the house. Apparently they don't like that. Anyway, he didn't tell them! They'd had previous private tenants that weren't related, so really didn't see any point telling them.

 

Good luck!!

 

 

Impecunious!

[impecunious]

was it a 'buy to let' mortgage?

 

 

No, originally it was just a regular mortgage, then they bought another house and decided to rent this one out! They then changed to buy to let.

[mte]

Having had housing benefit stopped due to council saying tenancy is on a non commercial basis, but they confirmed it's NOT contrived, I am waiting to see if they will be taking legal action against me.

 

My mother wants to use a letting agent in the future so she doesn't have to be involved. Will the Council deem this to be a commercial tenancy if it's with an agent? We need housing benefit to be able to live in the property but want to make sure we are doing everything correctly as couldn't cope if this happened again. Please advise, thank you.

[mte]

One more thing. The Council decided the tenancy wasn't contrived but can't change the decision about the non commercial tenancy, so I am appealing that decision. They asked my mum questions before making the decision. I know a contrived tenancy is fraud but if it's simply because it's not on a commercial basis can that still make it fraud?? thank you.