We are just about to enter Lockdown Number Two and things are looking very grim for many people.
- Grim for many tenants as they face losing their job – if it has not already gone
- Grim for many landlords as if tenants can’t pay rent they don’t have an income.
It’s time to try to think differently and I have been trying to think how landlords and tenants could work together to resolve these issues.
Work not rent
One thing which has occurred to me is that – if landlords have work which needs doing, and tenants have the skills to do that work – why can’t the tenants do that work in exchange for their landlord waiving all or part of their rent? So
- If the tenant is a plumber, they could help with plumbing works in their landlord’s other properties
- If the tenant is a painter and decorator, they could do redecoration work either in their own homes or those of other tenants
- If the tenant is a gardener, they could be employed by the landlord to do gardening work in their own and other properties.
Several landlords could even get together and set up some sort of exchange.
So, if landlord A has a need for a plumber and Landlord B’s tenant is a plumber, Landlord B could refer his tenant, Tenant B to Landlord A on the basis that Tenant B would do the work for Landlord A who would then pay Landlord B for the work done. In lieu of Tenant B’s rent.
A helping hand to re-train
Larger landlords could even consider helping tenants to retrain, for example, in an area where they need help.
Provided the tenant is a good tenant they would be sorry to lose, it could be considered an investment in the future.
Bearing in mind that if the tenant fell into arrears and the landlord was forced to evict them (which could take the landlord up to a year or more in current circumstances), that could cost the landlord far, far more, that the cost of helping the tenant to re-train and become employable again.
Exchange and pay rent
Another idea is to exchange, not skills but stuff.
Maybe if Tenant A has stuff they want to get rid of and Landlord A or Landlord B has a need for it – something similar could be done.
Where the item is given to someone in the exchange system with the recipient paying its value to the tenant’s landlord. This could be anything – unwanted gifts, cakes, craft items – you name it!
Perhaps someone should set up some sort of exchange system (ideally online) for landlords and tenants – specifically designed for helping tenants with their rent?
A bonkers idea? Maybe, maybe not. What do you think?
I wouldn’t fancy explaining at a tax inspection that my landlord profit for the year was three shiatsu massages, a yurt and a lemon drizzle cake.
I am not a tax expert so cannot comment on how this sort of thing will affect people’s tax returns and liability. Maybe someone better qualified than me could comment.
I was just throwing up ideas to see what people thought. SOMETHING is going to have to be done to help all those tenants who are going to lose their jobs.
The current solution, which is that landlords have to continue to house them whether they are paying rent or not, is not really sustainable long term. Although I am sure many tenants would like this!
Tax is not really a problem because one is already required to declare the value of goods or services received as payment.
Great Idea on the face of it. I think there may be repercussions with the idea as far as the inland revenue are concerned.
Easy way to get round the tax aspect is for the tenant to do the service “for free” and with only a verbal acknowledgement, then the landlord to simply “forgive” in writing an agreed amount of rent so it cannot be used in a later arrears claim. If you owe money you don’t get taxed on any amount that gets written off, likewise if you agree to do odd jobs for the landlord in return for a reduced rent. It would have to become a vey widespread phenomenon before HMRC started looking at “benefit in kind” type issues. It took years before they cottoned on to taxing company cars, for example.
It may even be legitimate to work off a debt at an agreed hourly rate, but I wouldn’t be too certain there. Otherwise what would stop an employer “lending” you a year’s salary in advance then you paying it back by working it off and arguing that no tax was due as it was just repayment-in-kind of a debt.
What you probably don’t want to do is specifically get paid an amount in a separate transaction for work done then later to use that money to pay the rent, unless the money earned would not take you past any benefit or tax thresholds.