Income from lodgers/tenants

Sorry about the confusion with the earlier post,  this is a bit messy and other issues kept popping into my head!

Client and son own property on 1/3 and 2/3 basis
They have a sub tenant,  M who is a friend so he also has some meals with them (in effect like a lodger/boarder)
Tenancy agreement signed by M with rent at £75 pw.  At the time he was working.

M came out of work and was awarded HB on shared room rate of £50 pw. My client (who had done this for other tenants) agreed to accept this as reasonable and reduced M’s rent accordingly.

Soon after the LA stopped HB on grounds that it wasn’t a commercial tenancy.  The appeal was upheld few days ago and arrears of £50 pw will be paid.

During the life of M’s HB appeal my client had lodged an IS appeal due to reduced IS because of deemed income from rental.  This
was calculated using the initial £75 pw rent to be charge less £20 ignored then her 1/3 of remainder ie £18.33 pw.  AFAIC JCP can take deemed income because tenant was liable (tell me if I’m worng).

Additionally do you think there’s any scope in arguing that the lower rental of £50 set by LA was accepted by client or will her share of the £25 reduction be seen as notional income ?

If M was classed as a lodger there is a higher disregard of rental income.  Can we argue he is even though he has a tenancy agreement?

And there’s more….I don’t have a clue about this and don’t have the resource material here with me so can’t look it up:-

Currently there are two 25% exemptions, one for son due to smi and one for tenant as he is an informal carer.  Would any change from tenant to lodger make any difference to this?

Sorry it’s a bit all over the place but any ideas would be gratefully received.

The tenancy agreement is a red herring.  If he lives with the landlord and it is not a specially built block of flats then he is an excluded occupier and has, among other things, no statutory protection from eviction.  Housing status is decided by the facts behind the agreement and the facts say he is a lodger with all that that entails for social security law.

And it is not reasonable for the DWP to use the deprivation provisions to assess the rental income as £75 instead of the actual figure of £50 unless, of course, they can prove significant operative purpose, etc.

Thanks Paul so are you saying she should have the lodger disregarded income which is the first £20 together with half the rest
rather than tenant disregard which is just the first £20?

No.  Tenant and lodger are for these purposes interchangeable terms.  Only the £20 disregard applies unless meals (board) are provided.  Then the higher disregard applies.

Ah right, thanks Paul

Sorry for mithering but I’m just told me he has his own sc bedsit in the house. Does it make a difference?

Possibly.  Para 19 of schedule 9 of the IS Regs refers to dwelling and not dwelling house, a term that was commonly used in property law.  A dwelling can be the whole or part of a house.  So, essentially, if the living arrangements at are at arms length in a sense that they could not be said to be sharing any part of a dwelling at all but have separate dwellings within the same house, then there is potential for arguing that the disregard doesn’t apply and that the rent should be income from capital and therefore treated as capital under reg 48(4). 

However, I think that this might stretch the reg a little.  The wording of para 20 sort of militates against interpreting reg19 in this way as I don’t think that that interpretation was what the regulator intended.  Having said that, paras 18, 19 and 20 are linked and need to be read as a whole to get a sense of what was intended.  Then the issue would seem ultimately to be whether they were “residing together” or not.

I’m very grateful, thanks Paul.