It’s always a nice feeling, seeing your rental income appear in your bank account. But what if your tenant was a hairdresser, or a baker? Would you forego some of that rent in exchange for free haircuts or cake?
If you would then you’re not alone - 20 per cent of buy-to-let landlords are in favour of trading rent for goods and services, according to a new poll by Simply Business.
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37 per cent of landlords wouldn’t exchange rent for whiskey
The news comes after one landlord was caught with £40,000 worth of stolen whiskey that he’d taken in place of rent.
While accepting stolen goods is of course a bad idea, 37 per cent of the 450 landlords polled said they had no interest in exchanging rent for any goods or services.
On the other hand, 20 per cent were fully in favour of the idea, while 43 per cent worried about the legal consequences.
Is it legal to exchange rent for goods and services?
Just like accepting rental payments in cash, you can wander into murky ground when receiving goods or services in place of rent.
Firstly, for an assured shorthold tenancy to be considered legal, you must accept at least £250 a year in rental payments. As well as this, quantifying goods and services when you fill in your Self Assessment tax return can be tricky, and if you get it wrong HMRC might think you’re trying to commit fraud.
And this is assuming you have a good relationship with your tenant. If you have a “gentleman’s agreement” and your relationship sours, they could claim to have given you the agreed upon service or item when they haven’t. In this kind of ‘he said, she said’ situation it’s difficult to prove anything, and you could end up making a loss.
While it’s not illegal to receive goods and services from your tenant, you do so at your own risk. You should keep as much of a paper trail as possible just in case things go wrong, and if in doubt, take advice from your legal counsel.