Share this content

Relative Rents Trust House-Universal Credit Issue?

Trustees Let Residential Property To Poor Relative - Any Universal Credit Issues for Relative?

Didn't find your answer?

The trustees of a discretionary settlement are mum and dad and their two adult daughters.

The trustees let out the settlement residential property to a state pensioner relative of the four trustees who has fallen on hard times. Rent is charged by the trustees at a reduced rate of £300 per month (£3,600 per annum), although the market rent is probably above £400 per month. The settlement deed authorises the letting of the property to this unfortunate relative who has no savings.

The unfortunate relative has started moaning about being unable to afford the rent payable to the trustees, partly because the relative's drug addict daughter, who is unemployable, has decided to move into the settlement property to be with her father. The relative's 2021/22 income seems to be the standard state pension of £9,339.20 plus the tax-free Personal Independence Payment (PIP) which may amount to between around £4,300 to £7,900 per annum (relative is cagey about this). The drug-addict daughter has no income, and it appears this daughter and her father have no stomach for claiming any state benefits for daughter.

Dad trustee feels some sympathy for his unfortunate relative (it is actually his brother) and the drug addict daughter (his niece), and is torn between the trust requirement to receive rents due on the one hand and his brother's income position/problems on the other.

Despite urging the unfortunate relative to apply for Universal Credit, the unfortunate relative has no desire to look into this state benefit. This is borne out of fear of being asked to repay Housing Benefit for earlier years.

I have advised the trustees that I cannot give any advice on state benefits. Dad trustee is more than happy to "hold his unfortunate relative's hand" and take him to the local authority to discuss Housing Benefit, but the trustees' worry is that because the house is owed by a relative(s) of the unfortunate relative no Universal Credit or Housing Benefit is payable.

As it is, the house is owned by the four trustees from the same family. It appears the unfortunate relative was grilled by the local authority housing benefit department or Universal Credit website as to the relationship between him and his landlord, and has confusingly told them that he rents the property from his brother (untrue - it is the trustees who are letting the trust property).

The trustees really only wanted to know if the letting to a relative makes any difference to state benefits compared to a rental to an unrelated party. The trustees want to do the honest thing, but cannot vouch for the honesty of the unfortunate relative or his drug-addict daughter.

I do not know the answer to this conundrum but wonder if anyone out there does.

Replies (4)

Please login or register to join the discussion.

By Tax Dragon
16th Apr 2021 06:39


penelope pitstop wrote:

I have advised the trustees that I cannot give any advice on state benefits,

I wonder why you've decided to give it a go?


penelope pitstop wrote:

The settlement deed authorises the letting of the property to this unfortunate relative who has no savings

(which, btw, I don't understand, unless you are saying the unfortunate relative is a beneficiary)... sorry, got distracted, lost my train of thought. Children! I think I was thinking about the mix of trustee obligations (to operate the trust for the benefit of beneficiaries), if that includes the brother then whether the state 'should' pay (in effect) the trustees (my way of second guessing rules of which I have actual knowledge... so it was supposed to be a thought only... shouldn't have written it but just trying to get back on my train)...

Nope, it's gone. Lost the thread completely. Sorry for getting yours off to such an irrelevant start. Except... I'd stick to your guns. Don't advise on matters you know not of. (You don't want to get derailed too! :-) Have my meanderings at least provided a metaphor? Oh, no, wait... you drive everywhere... Dangnabbit and thunderation!)

Thanks (0)
Replying to Tax Dragon:
By Tax Dragon
16th Apr 2021 06:50

Tax Dragon wrote:

Don't advise on matters you know not of.

And if you are minded to ignore this, at least check your contract/LoE and insurance, before you provide your advice.

Thanks (0)
By Samantha20
16th Apr 2021 08:36

I know someone who rents a property to family (their son and daughter-in-law and grandson). The son and daughter-in-law receive housing benefit.

The council sent the landlord a form with questions including what the landlord would do if the tenants stopped paying rent.

I don't think councils have a problem paying HB if the landlord is a relative now, as long as it is a bona fide landlord-tenant relationship. Most councils are under pressure to provide accommodation and I think that they are only too happy for people to be in private rentals even if the landlord is a relative.

If the council was ok about him renting from his brother, I don't know why you think they would object to him renting from trustees? It also means that they don't have to provide accommodation for his daughter which is another benefit for the council.

Thanks (0)
By paul.benny
16th Apr 2021 11:55

Universal Credit is a working age benefit. Unfortunate Relative is not eligible to claim.

PIP is also for working age people but can continue after state pension age unless circumstances change. Daughter coming to live with Unfortunate Relative probably qualifies as change in circumstances that should be notified to DWP. Unfortunate Relative can then apply for Attendance Allowance

AFAIK, housing benefit is not affected by the identity of the landlord. If there were any historic overpaid housing benefit, I think it likely that repayment would already have been sought.

Daughter is almost certainly eligible for UC, although I've no experience of how DWP deal with people with drug dependency.

I would strongly advise Unfortunate Relative to seek assistance from Citizens Advice (with support of Dad Trustee) rather than going directly to local authority. Benefits are core skill of CA and they can look at the wider position and assist with form completion.

Thanks (0)
Share this content