The rules regarding renting privately from a relative and claiming housings costs (housing element of UC or Housing Benefit) are complex, you usually need to:
- have a proper tenancy
- sign a tenancy agreement
- pay a ‘commercial’ rent regularly like you would to any landlord
The DWP often check to make sure the tenancy was not set up so you can get benefits.
Your relative needs to show they have taken on all the responsibilities of a landlord and that they would take steps to evict you if you breach the tenancy.
Contrived Tenancy
You are not entitled to benefit support for housing costs if the DWP (in the case of UC) or a local authority (for HB) believes you’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.” In the case of housing benefits this is defined in the the HB Guidance Manual
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.
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 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 you or your 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.