UC Housing Cost Element - Renting from Parents

Hi

Hoping someone can give me some advice on this issue.

I have a client who was evicted from his previous property and was unable to find a new rented property (issues with no references or money for the bond). His father bought a property for the purposes of his son to rent from him to recover the costs of the property which was done through a letting agency (i.e. client deals with the letting agency for everything).

Client attempted to claim the rent through the UC HCE but UC have refused due to him renting from his partner with their argument being that there is no “commercial value” because they argue that his father would not evict him if he did not pay the rent - father disagrees and says he would evict them as the tenancy agreement says.

Client lives with a partner who is also on the tenancy agreement.  I understand that the father and son up until very recently (just before the father bought the property) were estranged and hadn’t spoken to each other for a number of years.

Two options have been advised (one by the letting agency and one apparently by the DWP however nothing in writing).

1. Letting Agency advised that the father should change the lease of the property into his current partner’s name who is no relation at all to our client as they say this will resolve the issue. I’m dubious about this option as it sounds “dodgy” and I assume the DWP will just say you’re trying to “work the system” which they obviously don’t allow.

2. The DWP UC advisor (unknown who as was done over the phone) advised them to take our client’s name of the tenancy and leave on his partner’s name on as he is no relation to the father - we’ve not got anything in writing and, to me, this doesn’t sound like the correct advice and would be viewed upon as the same way the first option would be.

Any help would be greatly appreciated - my thoughts at this stage was to appeal the decision and argue that it is commercial regardless of whether it is rented from his father.

Thanks

Adam

This is pretty much the definition of a contrived tenancy…

Unless, you’re missing the bit where the son was employed and previously could pay the rent without relying on benefits. Then you might be able to argue the case.

I don’t agree that this is necessarily contrived, nor that it is necessary for the son to have previously been able to afford the rent without benefits.

There is nothing intrinsically wrong with a father investing his money in a property, and then renting it out to his son, as long as there is a commercial tenancy in place.

I would appeal this. In the couple of cases I’ve had like this, DWP backed down fairly quickly, and we didn’t get to a hearing.

Although this is for Northern Ireland, it contains lots of useful information and case law about the issue of contrived tenancies and UC.

Universal Credit decisions on contrived tenancies

Important points to highlight are that the burden of proof rests with DWP to show this is a contrived tenancy and the fact a tenant is a relative of their landlord does not, by itself, show that the tenancy was created in order to abuse the benefits system. There may be a genuine need for accommodation and a genuine need for payment for such accommodation.

Further, It can help to demonstrate a genuine commercial arrangement if the landlord has complied with all statutory obligations, such as

* registering as a landlord, 
* protecting any deposit, 
* getting the necessary certificates for the property. 

Case law ([2020] UKUT 240 (AAC)) is clear that the test is not whether a landlord is a “commercial landlord”; rather it is a test of whether the occupation agreement under consideration is on a commercial basis,

And just found this from Citizens Advice which is also very thorough.

How to challenge decisions -contrivance and non-commercial agreements for Housing Benefit and Universal Credit Housing Element

it doesnt sound like the DWP have done any commerciality checks apart from see the parent/child relationship and say “no”
from a HB persepctive, what we are looking for are the commercial elem,enmts of an agreement - so the property had the gas/electicial safety vcerts in place prior to being rented, that the corrects teanat checks were carried out, that any deposit issa kept in an official deposiut scheme etc.
the fact the father has a letting agent dealing with it helps

the idea to remove/draw up a new tenancy is wrong and plays into the idea its contrived to take advantage/ not on a commerial basis.

id be checking the pre tenancy stuff was in place, and if so, ask for a recon/appeal the decision

Paul_Treloar_AgeUK - 28 November 2023 02:28 PM

And just found this from Citizens Advice which is also very thorough.

How to challenge decisions -contrivance and non-commercial agreements for Housing Benefit and Universal Credit Housing Element

Thanks! I’ve only just discovered this medium website which is great for more commentary on various issues!

Thanks all!