contrived tenancy UC
Help please, I am struggling to find info on contrived tenancies for UC, are the rules the same as the HB ones ??
My client lived in a house jointly owned with her ex husband, he paid her an amount to cover her share of the mortgage, her son then bought the house from his parents and let it to his mother [ my client ]
My client then having no income claimed UC and the DWP will not pay the housing element as they say the tenancy is contrived
The son is now threating to evict my client [ his mum ] as she cannot pay him any rent.
Not sure why the son bought the property ,ironically , probably to secure a home for his mum
Is there case here to defend ??
Here is some ADM on the subject.
F2140 A claimant will be treated as not liable to make any payment or payments where the DM is
satisfed that the claimant’s liability to make the payments was contrived1
in order to
1. secure the HCE in an award of UCor
2. increase the amount of the HCE in an award of UC.
1 UC Regs, Sch 2, para 10(1)
F2141 F2140 does not apply if the claimant is treated as not liable to make the payment or payments
because of F2105 et seq1
1 UC Regs, Sch 2, para 10(2)
F2142 Contrivance can be on the part of the claimant, the person to whom payments are made, or both
acting together. There must be something about the arrangements relating to the liability that indicates
it seeks to abuse the HCE of UC. It is the DM’s responsibility to show such arrangements exist before
deciding that abuse is involved. This means the DM must establish the facts and determine the dominant
purpose of the arrangement before deciding to treat that person as not liable to make the payment.
F2143 Account must be taken of all the available evidence when making a decision that a liability has
been created to abuse the HCE of UC.
F2144 The issue is not whether a liability exists, but whether a liability was created to abuse the housing
costs element of UC. The DM must decide whether a liability exists before considering whether or not it
is contrived, although the two questions often involve considering the same facts.
F2145 The DM should also look for arrangements the claimant has entered into
1. which create a liability they cannot meet without the HCE of UC and
2. when they could have avoided the situation and still been adequately accommodated.
F2146 This would not normally be the case when, for example, even though they rely on HCE of UC to
help meet their liability to make relevant payments a person
1. previously had no accommodation or
2. has moved home
2.1 to take up work because they could not travel to work from their previous address or
2.2 because their family was overcrowded at their previous address
2.3 but the move does not result in an increased amount of HCE.
F2147 – F2149
many thanks UB40
Is any one ware of any case law that assists my client in this situation ??
The reason for the transaction was to keep the client in the accommodation as it was due to be sold and she could not afford to buy it herself so would have to move out. She has lived there many years and has mental health issues which may have been made worse had she needed to move
I wouldn’t worry about case law until you can explain what’s happened here in more detail and so that what’s happened makes some kind of sense.
You say that the son bought the house as it was “due to be sold” yet you have said that the client owned the property jointly with her ex-husband, so on what basis was it being sold and by who? what happened to the sales proceeds if there were any?
If the son bought the property to keep his mother in the property, is it the case that he needs to charge rent on the property because he has his own mortgage on the property and if so, can he show that the bank or building society are aware that he has used the mortgage on a buy-to-let basis?
As you can see from the guidance, these type of things very much rest on the facts of the individual case and there’s lots in your two posts that don’t seem to add up as such.
many Thanks Paul T, the agreement was that when the couple divorced the house would be sold, the client would have had to buy out her husband to remain in it I understand, so when the divorce went through the son bought it and paid off the father the father had been paying spousal maintenance to my client so i gather she had no money from the house sale. the son bought the house and the money went to the father.
no idea if its buy to let mortgage at this time
the son has a mortgage so needs to charge rent and will have to evict my client in due course if rent is not paid
the dwp argument is that the timing of the rental agreement and the clients claim for UC are suspicious as they are at the same time and that as the cl still live sin the property ” she has not had to take on a rental contract with the son due to homelessness “
but of course had the house been sold to another person she would have been homeless,
So from what you are saying, the DWP have accepted the reasons for the necessity of the house sale itself and the apportionment of the proceeds, otherwise your client would be having a deprivation of capital decision and denied any UC at all.
Therefore, in my opinion, your argument is actually quite straightforward - your client’s son has purchased the house in question and has a mortgage that needs to be serviced, hence his charging his own mother rent.
The reason I mentioned buy to rent is it isn’t usual practice for mortgage providers to give people a mortgage for a house that they’re not living in - hence any evidence they have to confirm that side of things is only going to help I think. Obviously we’re not qualified to give regulated financial advice but it’s pretty clear this is the case What’s consent to let?
Can I rent my property out to family?
A lot of buy-to-let mortgages will have terms and conditions that prevent you from renting out the property to immediate family such as adult children. But consent to let terms are less likely to specify you can’t do this.
But that doesn’t necessarily mean your lender will be happy with this arrangement. You’ll still have to meet all the other consent to let terms, like having a legal tenancy agreement drawn up and charging a market value for rent.
If you’d hoped you’d be able to have your family member as a tenant and charge a lower rate of rent, this might mean you can’t get consent to let, but you could try to find a family buy-to-let mortgage.
Family buy-to-let mortgages are quite hard to come by, but they typically ask that the rental income covers just 100% of the mortgage cost, with nothing more on top.
Of course, it’s not as simple as saying that if the son hasn’t got consent to let the property then the tenancy is contrived but I don’t think it would help the case a great deal. Really not sure what their point about her not being homeless brings to the party.
Like Paul, I don’t really understand the DWP’s point. If they accept that mum does not have money to buy a place of her own from the proceeds of sale, and doesn’t have any income, she will end up claiming UC and HCE wherever she lives. The point about contrived tenancies is that they are contrived so that a tenant can claim HCE when they otherwise wouldn’t need to. The fact that the son has a mortgage to service explains why he has to charge her rent, and so why she has to claim HCE. if you need case law on that R v Solihiull HBRB ex p Simpson might help. in that case a parent bought a house to let to their child but there seems no reason why the converse shouldn’t be equally OK.
I’m surprised, though, that DWP haven’t argued that the arrangement is non-commercial. If they go down that road you may have more of an issue, but there’s some helpful case law.