Benefit support for housing costs when renting from relatives
Entitlement to the housing costs element of Universal Credit or Housing Benefit when renting from, but not living with, a close relative.
The rules outlined below apply to claimants of the housing costs element (HCE) of Universal Credit (UC) and Housing Benefit (HB) claimants. For most people, new HB claims are not possible, and they will have to claim UC to get support with their housing costs.
The Department for Work and Pensions (DWP) administers and delivers Universal Credit, whereas local authorities administer Housing Benefit.
Guidance on rules is provided in the DWP’s Advice for Decision Makers (ADM Chapter F2) (PDF) in relation to applications for the HCE of Universal Credit. For convenience, this is referred to and quoted below. Equivalent and similar guidance concerning the application of these rules in Housing Benefit can be found in the Housing Benefit Guidance Manual (PDF).
Is it possible to claim the housing costs element of Universal Credit or Housing Benefit when renting from a close relative?To be entitled to help with housing costs through the HCE of UC or HB, a person must be ‘liable’ to make rent payments. This means their rent agreement must be legally enforceable. A person may be considered as liable to pay rent, and entitled to benefit support for housing costs, if they rent a property from a relative who does not reside with them.
A person who resides with, and pays rent to, a ‘close relative’ cannot claim benefit support for housing costs because they should not be treated as liable to pay rent. What is meant by ‘close relative’?A ‘close relative’ is defined as:
- a parent;
- a parent-in-law;
- a son or daughter;
- a son- or daughter-in-law;
- a step-son or daughter;
- a sibling; or
- the spouse or unmarried partner of any of these people.
A claimant isn’t entitled to benefit support for housing costs if the DWP (in the case of UC) or a local authority (for HB) believes they’ve deliberately entered into a tenancy in order to take advantage of either of these benefits (what’s known as a ‘contrived’ tenancy). According to the ADM Chapter F2 (PDF), “There must be something about the arrangements relating to the liability that indicates it seeks to abuse the HCE of UC.”
It’s up to the DWP or local authority to show that such an arrangement exists before determining if abuse is involved. To do this, they must establish the facts, and take account of all the available evidence, before deciding someone is trying to abuse the system.
Who might be deemed to be abusing benefit support for housing costs schemes?The person abusing the system might either be the claimant, the landlord, or both acting together. It’s up to the DWP or local authority to demonstrate an abuse is being attempted.
An example of abuse provided in the DWP’s ADM Chapter F2 (PDF) is an arrangement which creates a rent liability the claimant cannot meet without benefit support and which they could have avoided and still found adequate housing accommodation.
Contrivance between claimant and landlord doesn’t necessarily have to be the result of explicit agreement between them. It’s not necessary for the claimant or landlord to have acted deceptively for the DWP or local authority to decide there’s been contrivance. In such cases, the DWP or local authority must first determine a liability exists before considering whether the tenancy is contrived.
2. Is it a ‘non-commercial’ tenancy arrangement?Support for housing costs isn’t payable for tenancies that aren’t commercial.
The DWP or local authority might consider a rental agreement to be non-commercial when it includes terms and conditions which aren’t, or which the parties didn’t intend to be, legally enforceable. For example, charging a low rent doesn’t automatically make an agreement non-commercial if that’s what the parties intended.
Can the rules be avoided by creating a trust?Claimants renting through trust arrangements aren’t entitled to receive the housing element of UC or Housing Benefit if the trustees or beneficiaries of the trust include:
- the claimant;
- the claimant’s partner;
- a child or qualifying young person for whom either the claimant or their partner is responsible; or
- a close relative of any of the above who lives in the accommodation with the claimant.
Where a claimant, their partner, their ex-partner, their partner’s ex-partner, or a ‘close relative’ who lives with them is a director or an employee of the company that is the landlord, and they cannot show the arrangement is not a means of abusing UC or HB, then the claimant is treated as not liable for housing costs (and therefore not eligible for the HCE or HB).
Can a claimant challenge the decision if refused benefit support for housing costs?Claimants who are refused benefit support on any of the grounds set out above and who are unhappy with this decision can challenge it.
Information on how to do this can be found on the Commons Library’s constituency casework page on challenging benefits decisions.
Further Information- Commons Library briefing: Housing Benefit: renting from relatives
- GOV.UK: ADM Chapter F2: Housing costs element (PDF 208 KB)
- GOV.UK: Housing Benefit Guidance Manual (PDF 361 KB)
- GOV.UK: Housing Benefit
- GOV.UK: Housing costs and Universal Credit
- GOV.UK: First-tier Tribunal (Social Security and Child Support)
- Shelter: Claiming benefit if you rent from family
- Shelter: Housing benefit revisions and appeals
- Citizens Advice: Help with your rent – Housing Benefit
- Citizens Advice: Universal Credit
- Commons Library consituency casework article: Challenging benefits decisions
The Commons Library does not intend the information in this article to address the specific circumstances of any particular individual. We have published it to support the work of MPs. You should not rely upon it as legal or professional advice, or as a substitute for it. We do not accept any liability whatsoever for any errors, omissions or misstatements contained herein. You should consult a suitably qualified professional if you require specific advice or information. Read our briefing for information about sources of legal advice and help.