We are renting our house in a pension development from our son, so would we qualify for rent allowance and council tax assistance? Steve Webb replies
My wife and I live in a retirement home and have a pension credit. The property was bought by my son because we are simply too old to qualify for a mortgage, no matter how small.
However, we are responsible for all charges, including council tax and service charges. Could we claim this?
In addition to this we also pay my son a small rent and wondered if there was help as he is obviously a relative?
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Help with bills: Our home in a retirement home is owned by our son, so that prevents us from claiming assistance for council tax and service charges (Stock Image)
Steve Webb replies: The good news is that there’s no reason why you couldn’t get help with your council tax.
Whether you are a homeowner or renter, you can get help with city taxes if you have a low income.
Provided the bill is in your name and you are responsible for paying it, you should contact the council and tell them you have a pension credit.
If you are on the guarantee credit element (for those on the lowest incomes) I would expect them to pay your council tax in full.
The situation around your rent is much more of a gray area.
The basic premise is that if this is a legally enforceable tenancy agreement where you are treated like any other tenant – including potential eviction if you fall behind on rent – you may be able to get housing benefit.
Unfortunately, the system is much less understanding when it seems like this is just a family transaction and especially when it seems likely that you could stay where you are even if your son didn’t charge for rent.
In this situation it is highly unlikely that you will get help.
You can read more about the matter in a note prepared by the House of Commons library for MPs a few years ago specifically on the subject advantage for people who rent from a family member.
As this note makes clear, there are certain tests that the Ministry of Work and Pensions or the municipality will use to decide whether housing benefit can be applied for.
Questions they will ask include:
– Has this rental agreement been concluded with knowledge of the benefit rules, specifically to gain access to public funds – a so-called ‘contrived rental agreement’?; then no payment is due;
– Is there a ‘non-commercial rental’, which includes terms and conditions that one or both parties do not intend to enforce?; this may also mean that you are not entitled to a benefit; however, charging a low rent does not in itself make a rent ‘non-commercial’; in your case, it’s more likely that even if you have a lease outlining the landlord’s rights to evict for non-payment of rent, there’s no chance your son would do so.
Finally, you raised the possibility of assistance with service costs. Again, this is a somewhat gray area with a lot depending on what’s included in the service charge.
The regulations related to this issue – The Housing Benefit Regulations 2006 (on legislation.gov.uk) – have a section about service costs that *cannot* be claimed for rent allowance.
These include:
– Expenses for daily living costs (e.g. food, laundry, cleaning your home)
– Cost of buying furniture
– Costs of alarm systems
– Medical and healthcare costs
– Service costs for fuel in your own home.
On the other hand, service charges that are a requirement of living in the property and cover things like financing communal elevators or window cleaning or waste arrangements are more likely to be covered.
As you will see, a lot depends on the details the charges are for, and it is possible that some of your service charges are eligible and others are not.
The best I can suggest is that you apply for housing benefit and provide full details on both your lease and service charges and what they cover.
The municipality then determines how much rent and/or service costs it will reimburse.