Not liable for rent for housing benefit purposes

In order to obtain housing benefit, it is necessary to be counted as liable to pay rent. [1] The following are the more common situations in which people are treated as not liable for rent (and so cannot get housing benefit).

If a person lives with a close relative and pays rent to them, housing benefit is not payable. A 'close relative' is defined as a mother, father, sister, brother, daughter or son, including in-laws, step-parent/child and the partners of any of these. [2] The definition of close relative includes a half-brother and sister. [3]

Payments to close relatives whom the claimant does not live with do not fall under this exclusion (although the local authority may try to argue the letting is contrived or a non-commercial arrangement, see below).

If a person occupies a property on an agreement that is not made on a commercial basis, housing benefit is not payable. [4]

There are no rigid rules in determining what is a commercial arrangement. Local authorities should not assume there is no commercial arrangement just because the agreement is between close friends or relatives, the rent is low or because the landlord does not let to tenants for purely financial reasons. [5]

If a person's agreement to pay rent was set up to take advantage of the housing benefit scheme then housing benefit is not payable. [6] To deny housing benefit for this reason, the local authority must be satisfied that the main reason for creating the liability is to obtain or increase housing benefit entitlement. Local authorities must consider each case on its own merits.  The following case law may be useful.

In R v Solihull MBC BHRB ex p Simpson [7] it was held that to use this exception, the local authority must be satisfied that the reason for creating the liability is to obtain or increase housing benefit entitlement. In this case the father of the housing benefit applicant’s partner bought a house which the applicant and his family lived in. Previously they had lived in accommodation that was unsuitable for their daughter, who had cerebral palsy. They applied to their local authority for a transfer but were told that they would have to wait 12 years. Here, it was possible to argue that the father of the housing benefit applicant’s partner had entered into the arrangement to provide accommodation for his family, rather than to take advantage of the housing benefit system.

R v Housing Benefit Review Board of the London Borough of Sutton [8] it was held that all circumstances of the claimant should be taken into account before any agreement could be held to be ‘contrived’. In this case the claimant was living in a house that belonged to her son-in-law. At first she paid rent but her son-in-law decided that she should live rent free. However, his financial circumstances later changed and he asked her to pay rent. She applied for housing benefit and this was rejected by the local authority on the basis that it was a ‘contrived arrangement’. The court held that when deciding whether an arrangement was ‘contrived’ the local authority should look at all the circumstances of the case, stating that “the board should have a specific finding of fact as to Mr Sully’s [9] ability or otherwise to maintain the property”. Here it was arguable that if housing benefit was not granted then the property would have to be re-let or sold, and so the arrangement had not been ‘contrived’ in order to take advantage of the housing benefit system.

Conversely, in R v Manchester City Council [10] an arrangement was considered to be ‘contrived’ where a landlord of multiple properties rented accommodation to persons who fell into the category of ‘vulnerable’, and so did not have to have their housing benefit reduced, when their rent was unreasonably high. The landlord charged the claimants very high rents – from two to five times that of the market rent. It was held that they were deliberately renting to the exempt groups and charging them well above market rent level in order to take advantage of the housing benefit system.

The following list gives the main other circumstances in which housing benefit cannot be paid if they: [11]

• claimant's landlord (or one of her/his joint landlords) is a parent of her/his child (who is under the age of 16) [12]

• claimant's landlord is her/his former partner and they lived together in the property on which the claimant pays rent. 'Former partner' has been held to include all former partners, not just the most recent. [13] The exclusion applies even if the dwelling currently occupied by the claimant is only part of the dwelling formerly occupied by the claimant and her/his former partner - eg where the claimant's relationship with their former partner has broken down and the claimant remains in the property but moves into a separate bedroom. [14]

• claimant was formerly a non-dependant of anyone living in the claimant's home - unless the letting was not intended to abuse the housing benefit scheme

• claimant (or a partner) owned the dwelling (including under a long tenancy) at any time in the past five years - unless s/he could not have continued to live there without giving up ownership.[15] An 'owner' is the person who is, 'for the time being' entitled to sell the property. Where a claimant's property was made the subject of a 'restraint order' in court proceedings connected with a criminal offence, the Upper Tribunal held that he was not the 'owner' from the time that order took effect because the effect of the order was to prevent him from disposing of the property himself.

• claimant rents from a company or trust in which s/he has an interest (but there are exceptions for lettings that are not intended to abuse the housing benefit scheme), or

• claimant (or a partner) has to live in the dwelling as a condition of her/his employment. [16]

Where a claimant is living in a house in multiple occupation (HMO) that should be licensed, the lack of licence alone does not mean that the landlord cannot charge rent. A tenant living in an unlicensed HMO is entitled to claim housing benefit as is a tenant living in a property where the landlord has not registered with Landlord Registration. [17]