Families often house each other, and money changes hands. Whether Housing Benefit will help with that rent depends on who the landlord is, where they live, and whether the arrangement looks like a real letting.
The rule that refuses these claims
The regulations for claimants over State Pension age list circumstances in which a person who pays rent is treated as though they were not liable to pay it, which removes entitlement to Housing Benefit for that rent (Housing Benefit (State Pension Credit) Regulations 2006, regulation 9, checked 1 November 2026). Two of them catch family arrangements.
The first is a tenancy that is not on a commercial basis. The second is where the liability is to a person who also resides in the dwelling and who is a close relative of the claimant or their partner. GOV.UK summarises the second as living in the home of a close relative (GOV.UK, Housing Benefit: eligibility, checked 1 November 2026).
Who counts as a close relative
The list is precise, and shorter than people expect. The regulations define close relative as a parent, parent-in-law, son, son-in-law, daughter, daughter-in-law, step-parent, step-son, step-daughter, brother or sister, and where any of those is one member of a couple, the other member (regulation 2, checked 1 November 2026).
That leaves a lot of family outside it. A grandchild, grandparent, aunt, uncle, nephew, niece or cousin is not a close relative for this rule, so rent paid to one of them is not refused on that ground alone. The commercial basis test still applies to every arrangement, whoever the landlord is.
Living in the same home is what triggers it
The close relative rule only applies where the relative lives there too. The regulation’s wording is a close relative who also resides in the dwelling, and both parts must be true. A parent renting a separate flat or house from an adult child who lives elsewhere is not caught by it, however close the relationship.
That distinction is the one to check first. A granny annexe with its own front door, or a separate property in the same street, is a different position from a parent paying rent for a room in their child’s own home, and the question the council will ask is whether they share the dwelling.
The commercial basis test
Every family letting has to pass it, whether or not the landlord is a close relative. The regulations say that in deciding whether an arrangement is not on a commercial basis, regard must be had, among other things, to whether the terms include terms that are not enforceable at law (regulation 9, checked 1 November 2026).
In practice a council looks at the arrangement the way a stranger would. A written tenancy agreement, a rent that reflects the local market, rent actually paid from the tenant’s account, and a landlord who deals with repairs all point towards a genuine letting. An informal understanding that the rent will be forgotten if money is short points the other way.
Renting a room as a lodger
Lodging with a householder who is not a close relative is not caught by the close relative rule. The same regulation still applies its other tests, so the arrangement has to be on a commercial basis and must not have been created to take advantage of the scheme (regulation 9, checked 1 November 2026).
In practice a lodger’s claim looks much like any other: a written agreement setting out the rent and what it covers, rent paid regularly by bank transfer, and a rent that reflects what a stranger would pay for the room. Where meals or bills are included, say so, because the council needs to separate the rent from the rest.
Arrangements created to use the scheme
There is also a general exclusion. The regulations treat a person as not liable where the council is satisfied the liability was created to take advantage of the Housing Benefit scheme (regulation 9, checked 1 November 2026). The same regulation catches other specific situations, such as a liability arising within five years of the claimant having owned the property.
That last one matters for families who have moved a parent’s home into a child’s name and then charged rent. Councils look closely at the history of the property as well as the current agreement.
Making the claim, and if it is refused
Claim through the council where the property is, and send the tenancy agreement with the claim. Be open about the relationship from the start, because councils ask, and a relationship disclosed later looks worse than one declared at once. Our main Housing Benefit guide covers how the amount is worked out.
If the claim is refused under these rules, ask the council for a written statement of reasons, then ask it to reconsider, and appeal to a tribunal if it will not change the decision. A benefits adviser at Citizens Advice or Age UK can look at whether the arrangement was genuinely commercial, which is where most of these cases turn.
Adult children who live with a parent who claims create a different issue, covered in our page on non-dependant deductions.