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Housing benefit where tenant has power of attorney for landlord

BC Welfare Rights
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Person 1 (potential landlord) and person 2 (potential tenant) have been close friends for decades. Person 1 is considering buying a property and renting it out to person 2. Person 2 has Lasting Power of Attorney for person 1 who has very early stages of dementia.

Would there be any problem person 2 receiving HB if they had POA for their landlord? (It would be HB not UC, change of address only).

And if they could claim HB, would the restriction on a person with POA from benefitting/making personal gain be problematic here?

Thanks

Paul_Treloar_AgeUK
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If I was you Billy, I’d call the Office of the Public Guardian for guidance on this one (helpline number if you scroll down).

I can’t necessarily see anything obvious in our LPA factsheet that would preclude such an arrangement but I can think of all kinds of potential scenarios whereby this could get tricky or messy. Just one obvious example, what is to prevent the LPA from agreeing that the tenant doesn’t actually have to pay rent anymore (apart from obvious fact this isn’t in best interests of the donor)?

Possible difficulty around contrived tenancy as well perhaps? Be interested to know how you get on.

BC Welfare Rights
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Thanks Paul. Yes, it is primarily the possible issues around contrived tenancies that I am stumped by.

ClairemHodgson
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massive conflict of interest here, i should have thought.  OPG will have views, which will probably involve someone else being attorney

you say the potential landlord is in early stages of dementia.  it is all about that person’s capacity.  s/he may well still have capacity - you don’t say whether or not the Power has been registered etc with the OPG (i.e. is active). 

can of worms, frankly, quite apart from potential benefits issues…...

andyrichards
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I don’t think there should an issue about the tenancy being created to take advantage of the HB scheme, but I could see a local authority raising an issue of commerciality of the tenancy on the basis of the arrangements not be sufficiently “arms-length”.  The tenant could, presumably, be making decisions on his own tenancy?

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The (potential) landlord has capacity and does not appear to be at risk of losing it soon. The main reason that the PoA was set up (Health and Finances) was because he was undergoing cancer treatment and the prognosis was uncertain at that time. He has since responded well to treatment.

Landlord will draw up the tenancy agreement and set the rent, etc. But one other factor(which I should have mentioned) is that if the landlord dies before the tenant (who is also in chronic ill health), the tenant will inherit the house.

Elliot Kent
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In benefit terms, yes, I think there is a potential issue about contrivance/commerciality. If, as the LA, I am aware of the full facts - i.e. that landlord and tenant are close friends, to the point of one having an LPA for the other, that the house has been purchased by the landlord solely for the purposes of being rented out to the tenant and that the tenant is due to inherit the house should the landlord die - then I am going to be wondering what the actual purpose of this arrangement is and I am going to start asking questions. Who knows what the outcome would be? If/when the LPA is registered, then it just starts to look all the more suspect.

In non-benefit terms, if they go through with this plan and the LPA is registered, then its just a massive conflict of interest. They both need to go and speak to (separate) lawyers before doing anything. Nobody here is likely to be qualified to advise on that.

[ Edited: 7 Aug 2018 at 02:48 pm by Elliot Kent ]
ClairemHodgson
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Elliot Kent - 07 August 2018 02:42 PM

In benefit terms, yes, I think there is a potential issue about contrivance/commerciality. If, as the LA, I am aware of the full facts - i.e. that landlord and tenant are close friends, to the point of one having an LPA for the other, that the house has been purchased by the landlord solely for the purposes of being rented out to the tenant and that the tenant is due to inherit the house should the landlord die - then I am going to be wondering what the actual purpose of this arrangement is and I am going to start asking questions. Who knows what the outcome would be? If/when the LPA is registered, then it just starts to look all the more suspect.

In non-benefit terms, if they go through with this plan and the LPA is registered, then its just a massive conflict of interest. They both need to go and speak to (separate) lawyers before doing anything. Nobody here is likely to be qualified to advise on that.

what Elliott said

this is a HUGE can of worms on all fronts

and, whilst noting what you say about the power of attorney being drawn up when potential landlord had cancer, you DID say s/he is in early stages of dementia

Were I the solicitor instructed for the potential landlord, the first thing I would want would be a full capacity assessment NOW, taking in all the separate issues for which capacity is currently needed.  there are also issues around the will - when it was drawn, was it done professionally, is it open to challenge by family members so far unmentioned?

were I the solicitor for the potential tenant/will beneficiary, I would be concerned re whether tenancy would be secure/whether will could be challenged/things of that nature (I don’t do that field of law but obvious concerns there)

were i the LA presented with such a tenancy - those issues have been touched on by others

were I the family member of either of these people, i’d be very concerned overall

BC Welfare Rights
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Thanks everybody, very helpful.

Just for info, the potential tenant was disowned by family 10 years ago due to revealing HIV status. Potential landlord has no family alive at all.

Thankfully they have each other.

ClairemHodgson
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Billy Durrant - 08 August 2018 09:53 AM

Thanks everybody, very helpful.

Just for info, the potential tenant was disowned by family 10 years ago due to revealing HIV status. Potential landlord has no family alive at all.

Thankfully they have each other.

still a can of worms

and will the potential tenant’s family remain estranged when they find out that potential tenant is in line to inherit a house?  i shouldn’t think so - if they’re ignorant enough to disown someone for being HIV positive ... (hah, i’m making assumptions…..)