Sale and rent back

Advice for homeowners on sale and rent back

Claiming Housing Benefit if you sell your home and rent it from the new owner

This page explains whether you may be able to get Housing Benefit if you sell your home and then rent it back from the new owner. The information below is only a guide and does not cover every circumstance. We recommend you contact us or get advice from your local Citizens Advice Bureau before making any decisions based on this information

I won’t be able to afford the rent if I sell my home – will I be entitled to Housing Benefit?

Possibly.

Housing Benefit can sometimes provide help with the rent in these circumstances but certain conditions apply. They are listed further down this page.

Claiming Housing Benefit within five years of selling your home

Usually, you will not be entitled to Housing Benefit if:

• you rent the home you once owned as a freeholder or leaseholder
  and
• you claim Housing Benefit within five years of selling that home.

This is called the ‘former owner rule’. But the rule does not apply if you satisfy us that you could not have stayed in your home without selling it. And, of course, the rule does not apply after five years have passed since you sold your home.

How to show us that you had to sell your home

This can be difficult. You will need to provide us with good evidence showing why you had to sell your home. This may be:

• letters from your mortgage lender about action they would take to collect any debts
• proof of your income and outgoings at the time you decided to sell
• evidence of other factors involved in your decision to sell.

You don’t need to show that keeping your home was completely impossible. But you do need to show that it was so difficult that you were forced to sell.

We will decide whether we are satisfied you had no option but to sell if you were to stay in your home, based on the facts of your case and the evidence you provide.

If you sell your home when you had other reasonable choices (see below), you won’t be entitled to Housing Benefit.

When deciding whether you qualify for Housing Benefit, we must consider things like:

• whether you could have claimed benefits to help with your home-ownership costs, such as Income Support, Jobseeker’s Allowance, Employment and Support Allowance or State Pension Credit
• whether you had debts that were secured on your home (such as a mortgage or a loan secured on your home) and whether these debts were likely to lead to your mortgage lender taking back your home
• other assets you could have sold.

If you don’t have to sell your home

If you sell your home and we decide you could have stayed in it without selling, then we will refuse your Housing Benefit claim. For example, we may refuse your claim if you sold your home to:

• repay unsecured loans, such as for credit cards, ordinary loans, or hire-purchase agreements
• reduce your monthly outgoings so that you could follow an interest, such as being a student or setting up a new business.

If I decide to sell my home, will its value affect my claim for Housing Benefit?

It depends. The amount of your savings will affect your claim. By ‘savings’ we mean money and assets such as:

• money in a bank or building society account
• Premium Bonds
• National Savings Certificates
• stocks and shares
• property.

Depending on how much savings you have, Housing Benefit may be reduced or not paid at all. The value of most types of savings is counted when deciding Housing Benefit, but some types of savings are not counted.

We may also ask you show what you did with any money you received from selling your home if you do not have it any more.

When the value of your home is counted as ‘savings’

If we decide the value of your home should be counted as savings, this will affect your claim for Housing Benefit. When deciding this, we must consider the facts of your case, including your knowledge of the rules and why you are selling your home. If we decide that the reason you sold your home was to claim Housing Benefit, then we will count the value of your home as savings. Depending on the amount, this may reduce your Housing Benefit, or may mean you are not entitled to any. In most cases, we will decide whether you sold your home to get Housing Benefit based on things like:

• your knowledge of the rules
• why and when you sold
• why and when you claimed Housing Benefit
• whether it was reasonable for you to sell your home, considering all the circumstances and evidence.

More information

If you have any questions or need more information, contact us or contact your local Citizens Advice Bureau.