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UC HCE renting from former partner
https://england.shelter.org.uk/housing_advice/benefits/claiming_benefits_if_you_rent_from_family says that “You can get universal credit to help with renting from a former partner as long as it’s a genuine agreement.” Unlike HB.
Is this still the case if the ex-partner’s children are living in the property?
Couple, separated, 3 children. Dad owns the house outright, has moved out and pays rent on a nearby flat. He wants to rent the house to his former partner and their 3 children, they all previously lived in the house together. Also, the ground floor of the house is a workshop which Dad will continue to use.
Can mum and the 3 kids get HCE included in UC?
The regulations for the UC HCE just have a general requirement that the liability is ‘commercial’. The HB regs are different and more prescriptive in that they spelt out a bunch of situations where, in effect, non-commerciality would be deemed.
So the claimant here would need to establish that the agreement is commercial all the same.
Renting from an ex-partner, having previously lived with the landlord and the dad’s continued use of the workshop are all factors which will be pointed to as tending towards a conclusion that the agreement is non-commercial, but that doesn’t prevent you arguing the contrary. It’s a judgment call at the end of the day and not something where the outcome can be known in advance.
We have a similar enquiry.
I can see these cases cropping up more. Because of the high rents and lack of rented accommodation coupled and parallels with the housing market i.e. current mortgage stuff, house prices going down, and lack of availability.
Playing loose with devils advocacy. Anyone got any thoughts on this type of scenario seeming contrived / not commercial.
Whether arguments around economic and social imperatives (e.g. schools, transport and work etc). That arguably can lead to or be the driver (jargon apology) for these arrangements for the reasons above?
These cases are always going to be intensely fact sensitive.
The ‘ideal’ set of facts is something along the lines of a person who is already a private landlord, who lets out a handful of properties say and just happens to let one of those out to a relative on all the same terms as they would do to any other member of the public. They would have appropriate insurance, consent to let from their mortgage company and comply with any local selective licencing requirements and all other statutory requirements. The further you move from that, generally the more difficult the case becomes to win.
In a case like the one brought up by BCD, the question is whether the parties should enter into this agreement and you are going to have to be rather circumspect in pointing out all the possible issues they may face. Even if you think that you may end up winning the eventual appeal at the end of the day, the prospect of potentially ending up stuck in appeal processes for a year or more is often enough to dissuade people going ahead with these sorts of plans.
While I haven’t had exactly the same situation I have had a case where the claimant rented a houseboat from a very close friend at a rent below the LHA, and the tribunal accepted that the arrangement was commercial. The key thing is that there needs to be a proper assured shorthold tenancy in writing with rent to be charged at or near the LHA rate. (In this case it should also cover the use of the workshop.) With that in place you can argue that there is a commercial liability, which would be enforced by the county court if necessary.
The UC regs differ from the HB regs in two significant ways. First, they do not have the provision about renting from an ex-partner. That would imply a policy decision that renting from an ex can now be commercial. Secondly, the drafting is slightly different. The effect of the HB regs is that a tenant can clearly be liable for the rent as a matter of property law but for HB purposes is treated as if they are not liable, even though they are. The UC regs focus more directly on whether there is a commercial liability. If there’s a proper tenancy agreement it would be hard, in my view, for DWP to displace the presumption that the arrangement is commercial, in the absence of any direct evidence to the contrary, or anything in the arangement which means that either party is better-off than they otherwise would be.
Finally, there is the public policy argument. The restrictions in both sets of regs are to prevent abuse of the system. With a proper AST in place it is hard to see what abuse there could be. Mum and children have to live somewhere, and will depend on UC wherever they live. Dad owns the property and doesn’t live there, so he can have a rental income from it, whoever lives there.
These cases are always going to be intensely fact sensitive.
In a case like the one brought up by BCD, the question is whether the parties should enter into this agreement and you are going to have to be rather circumspect in pointing out all the possible issues they may face. Even if you think that you may end up winning the eventual appeal at the end of the day, the prospect of potentially ending up stuck in appeal processes for a year or more is often enough to dissuade people going ahead with these sorts of plans.
Essentially that is what we have advised in our case Elliot.
I don’t think that it can really be said that having a written AST will create any sort of presumption of commerciality. The regulations require a liability which is on a commercial basis. An AST will create a liability, but that liability being ‘on a commercial basis’ narrows the class and there is plenty of caselaw on that specific term which it can be assumed that the legislator intended to adopt.
(Incidentally, the situation in the initial post is unlikely to be a tenancy, insofar as it concerns the workshop anyway, due to the lack of exclusive occupation).
The old dance in these cases was that someone would turn up at the council office with an AST. The council would note that the landlord had the same surname, give them a ring and ask “would you evict this tenant if the rent went unpaid?”. The indignant response would come back “No, of course I wouldn’t evict them! They’re my grandmother/niece/third cousin.” and the ‘non-commercial’ decision writes itself. The lack of willingness to enforce the terms militates against it being commercial.
The policy point is that these arrangements are often along the lines that the agreement will not actually be enforced as between the parties as opposed to the implication being that the arrangement would continue regardless and that the landlord is simply content to extract what they can from the benefit system whilst doing so.
I am not sure also that the re-writing of the regulations has anything to do with a relaxation of the rules as opposed to simplifying them. Rather than having a list of a dozen situations of essentially ‘deemed’ non-commerciality, followed by a catchall, you just keep the catchall and leave the rest to judgment.
Many councils have become extremely effective at investigating these cases. One of the most substantial changes with UC is that the DWP are extremely ineffective at investigating them, and their failure to put together any sort of coherent or reasoned case at tribunal level can leave you pushing at an open door. They basically seem to just have a questionnaire they get filled in and leave it at that.
Is this also complicated by the relationship breakdown? From our Homelessness factsheet in section on relationship breakdown?
I live in my spouse or civil partner’s property
If the property or tenancy is in your partner’s sole name, you have no rights under housing law. However, if you are married or in a civil partnership, you have ‘home rights’ under family law. This means you can live in the property as if you were the owner or tenant.
With home rights, you can pay the mortgage or rent and cannot be excluded from the property except by court order. You can ask the court to make an occupation order giving you access to the property or requiring your partner to leave.
O/P doesn’t say whether they were married or not but id they were, the above implies she has rights to stay in the home. Which in turn raises questions regarding the ability to require her to leave, even if an AST was created presumably?
While I haven’t had exactly the same situation I have had a case where the claimant rented a houseboat from a very close friend at a rent below the LHA, and the tribunal accepted that the arrangement was commercial. The key thing is that there needs to be a proper assured shorthold tenancy in writing with rent to be charged at or near the LHA rate. (In this case it should also cover the use of the workshop.) With that in place you can argue that there is a commercial liability, which would be enforced by the county court if necessary.
The UC regs differ from the HB regs in two significant ways. First, they do not have the provision about renting from an ex-partner. That would imply a policy decision that renting from an ex can now be commercial. Secondly, the drafting is slightly different. The effect of the HB regs is that a tenant can clearly be liable for the rent as a matter of property law but for HB purposes is treated as if they are not liable, even though they are. The UC regs focus more directly on whether there is a commercial liability. If there’s a proper tenancy agreement it would be hard, in my view, for DWP to displace the presumption that the arrangement is commercial, in the absence of any direct evidence to the contrary, or anything in the arangement which means that either party is better-off than they otherwise would be.
Finally, there is the public policy argument. The restrictions in both sets of regs are to prevent abuse of the system. With a proper AST in place it is hard to see what abuse there could be. Mum and children have to live somewhere, and will depend on UC wherever they live. Dad owns the property and doesn’t live there, so he can have a rental income from it, whoever lives there.
Thanks Paul, we’ve advised the obvious as above ‘commercial liability’. If client proceeds we have arguments ‘fact sensitive’ i.e. Elliot’s points relating to areas touched on in earlier posts and your really helpful post.
Which is not to dismiss your points e.g. they just don’t have the money to insulate the effects of any delays whatsoever.
Further issues on top of areas already alluded to e.g. child care places and funding, caring for an older adult. We think are arguable but…................
These extracts from Elliot’s post copy and pasted below encapsulate our approach, our thinking, and our advice (and gut feelings) to client over the past couple of weeks. But your post has given us some more food for thought if client did proceed and wanted help if necessary with any challenges against decisions.
‘These cases are always going to be intensely fact sensitive’.
‘In a case like the one brought up by BCD, the question is whether the parties should enter into this agreement and you are going to have to be rather circumspect in pointing out all the possible issues they may face. Even if you think that you may end up winning the eventual appeal at the end of the day, the prospect of potentially ending up stuck in appeal processes for a year or more is often enough to dissuade people going ahead with these sorts of plans’.
We posted on CITA’s Fiendfaceplace and got a response from a poster saying they have ‘had quite a few’. We’ve asked if they could share more detail and scenario’s?
Is this also complicated by the relationship breakdown? From our Homelessness factsheet in section on relationship breakdown?
I live in my spouse or civil partner’s property
If the property or tenancy is in your partner’s sole name, you have no rights under housing law. However, if you are married or in a civil partnership, you have ‘home rights’ under family law. This means you can live in the property as if you were the owner or tenant.With home rights, you can pay the mortgage or rent and cannot be excluded from the property except by court order. You can ask the court to make an occupation order giving you access to the property or requiring your partner to leave.
O/P doesn’t say whether they were married or not but id they were, the above implies she has rights to stay in the home. Which in turn raises questions regarding the ability to require her to leave, even if an AST was created presumably?
Apologies BCD for extensively leapfrogging.
Client has had advice on the route for separating cohabiting couples (Trusts of Land and Appointment of Trustees Act) - mortgage solely in ex partners name. That advice suggested if she pursued ToLATA she arguably may become a beneficiary but during the interim was not a beneficiary.