Renting a second property

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lexi101
lexi101 Online Community Member Posts: 2 Listener
edited March 2021 in Employment and Support Allowance (ESA)
Hello there I am trying to understand the rules regarding letting a second property. I thought that letting one property was considered  to be investment income - which would affect income based ESA but not contributory based ESA. I understood that it would not be considered to be work if a lettings agency undertook the management of the property. I have seen a thread on another forum in which someone thought the same but he had received a letter from the DWP stating that he was in breach of the ESA rules because the income derived from letting is over the permitted work entitlement earnings threshold. This suggests that the DWP would see this as work. The thread is a year old and I have not been able to contact the person to see what happened. I'm very confused as benefit helplines have suggested it should be considered as investment income. Has anyone been in the same situation or do you have any knowledge of this? Many thanks

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  • calcotti
    calcotti Online Community Member Posts: 10,001 Championing
    DMG Volume 9 Chapter 50: Self-employed earners (publishing.service.gov.uk)
    Renting out property as a business
    50425 If a person is letting properties that are not the home, the DM needs to consider if this is by way of a business.

    50426 A person who
    1. has a single property that is not the home and
    2. lets the property to tenants and
    3. collects rents and does any repairs
    is not conducting a business. The property is primarily an investment. See DMG Chapter 51 for the treatment of rental income. 
    So the guidance says a DM must decide and then makes clear that letting one property will not be treated as a business. It doesn't say that two properties will be treated as a business but clearly this is, by implication, a possibility. A DM will decide. 


  • lexi101
    lexi101 Online Community Member Posts: 2 Listener

    Thank you so much for your reply it is really appreciated . It is  so helpful to have the reference to the DMG so that I can refer to it
    if needed. With very best wishes 

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