Contrived agreement housing benefit?

It really is going to depend on the circumstances. Has he always been liable to pay rent to his friend? Why is he now claiming HB? If he had no previous liability to pay rent, what’s changed (and why?)

Where the claimant was previously a non-dependant of someone who still lives in the dwelling the onus is on him/her to demonstrate that the liability was not intended to be a means of taking advantage of the HB scheme: see Regs 9(1)(g) and (3).  Evidence of payments being made prior to the claim will help, especially if at the time he had no reason to think that he would need to claim HB.  The longer the arrangement has existed prior to claiming HB the better.

Expect the Council to consider a range of alternative reasons why it might be a “dodgy” tenancy:

- is the arrangement on a commercial basis (similar evidence to that referred to above will help - an audit trail of payments and both parties clear about the rent account balance)
- is there any indication that they might have been a couple before, in which case Reg 9(1)(c) could knock out the HB claim with no Reg 9(3) defence available

I am not saying HB will necessarily be refused for these reasons but Councils are trained not to put all their eggs in one basket where Reg 9 is in play - it is best to make detailed enquiries early on and rule out all the possible reasons why HB might be refused.

1964 - 29 April 2016 02:48 PM

It really is going to depend on the circumstances. Has he always been liable to pay rent to his friend? Why is he now claiming HB? If he had no previous liability to pay rent, what’s changed (and why?)

Thanks he has had a change of circumstances and is now very ill.

HB Anorak - 29 April 2016 02:50 PM

Where the claimant was previously a non-dependant of someone who still lives in the dwelling the onus is on him/her to demonstrate that the liability was not intended to be a means of taking advantage of the HB scheme: see Regs 9(1)(g) and (3).  Evidence of payments being made prior to the claim will help, especially if at the time he had no reason to think that he would need to claim HB.  The longer the arrangement has existed prior to claiming HB the better.

Expect the Council to consider a range of alternative reasons why it might be a “dodgy” tenancy:

- is the arrangement on a commercial basis (similar evidence to that referred to above will help - an audit trail of payments and both parties clear about the rent account balance)
- is there any indication that they might have been a couple before, in which case Reg 9(1)(c) could knock out the HB claim with no Reg 9(3) defence available

I am not saying HB will necessarily be refused for these reasons but Councils are trained not to put all their eggs in one basket where Reg 9 is in play - it is best to make detailed enquiries early on and rule out all the possible reasons why HB might be refused.

Thanks HB for getting back to me. :) great.

In contractual situations between parties, there is a strong presumption at law that there is no contract between family members. If you can surmount that little mountain, you have a chance

It boils down to the elements of the contract; offer, acceptance, intention to create legal relations, and consideration; the problem area being the intention to create legal relations. To quote Lord Denning ‘would reasonable people regard this agreement as intended to be legally binding?’ Intent in contract law is referred to as having an intention to form a legal contract, it isn’t enough that both parties are involved in the contract; there must be an intention to create legal relationship. An agreement can exist but it may not be legal, therefore, it needs to have legal intent.

The presumption of a non-enforceable contract means that the onus is on the parties to rebut the presumption with hard evidence. For example ‘X’ and ‘Y’ are closely related. Y is unemployed and in receipt of benefits. X owns a mortgaged property and he allows Y to live there for rent. Y puts in a claim for HB.

In order to rebut the presumption that there is no enforceable contract; ergo, no tenancy. There would have to be a tenancy agreement, and X would have to demonstrate that he would follow all the normal procedures for running a commercial tenancy including following the process for throwing Y out if Y defaults on the rent. There are lots of factors to consider in deciding whether it is a tenancy or a domestic arrangement, but the presumption is that it is a domestic arrangement

Given that the landlord resides with the claimant, the burden of proof that the arrangment is not desigined to take advantage is shifted to the claimant because he is a former non dependant.

The burden may still not be too heave because “take advantage” in this context does not mean “make the most of opportunities that it presents ” it means “abuse” (see CH/0039/2007 (at paragraphs 16-19,)

The Council might see letting to a friend as a non commercial arrangement, but again there is nothing inherenatly non commercial in letting to a friend, even if receiving the rent is not the sole motiviation See CH/1097/2004 where Mr Deputy Commissioner Mark held at paragraph 15

“15 …… It is clear from the decisions I have cited that there is nothing necessarily incompatible with an arrangement being on a commercial basis that it is made between friends.  Indeed flat or house sharing arrangements are frequently made between friends, when the owner of the flat or house wants either company or financial help towards the costs of the property.  Further, it does not prevent the arrangement from being commercial that the landlord would not let to anybody but the tenant”

I think it should be relatively easy to get over the problem of the claimant previously living rent free as the landlord might now simply nneed the money.  This would not render the new arrangement either non commerical, an abuse of the scheme, or detract from there being a new legal liability to pay [ see R v Sutton LBC ex p Keegan(1992)]

generalistadviser29 - 29 April 2016 02:56 PM

1964 - 29 April 2016 02:48 PM

It really is going to depend on the circumstances. Has he always been liable to pay rent to his friend? Why is he now claiming HB? If he had no previous liability to pay rent, what’s changed (and why?)

Thanks he has had a change of circumstances and is now very ill.

Who is the ‘he’ in this sentence - the landlord or the tenant?

As noted above, the issue of letting between friends is a surmountable problem. If it’s a case of the landlord having become unwell, being unable to work himself and so now needing to charge his friend rent, then not a difficult problem to overcome…...but if it’s the tenant that has become unwell, this would only explain why he might now need to claim HB to cover the rent he was always liable for - it wouldn’t explain why the landlord has suddenly decided to charge him rent….

Hi thanks for responding. Yes the tenant has fallen ill not the landlord.