Would an employer ever provide housing?

Dido Gompertz · 29 Mar

Should your company be providing housing for employees? We look at the benefits and drawbacks to this radical policy.

It’s the well-known millennial paradox: all the good jobs are in the capital, but to move to the capital in the first place, you need to pay exorbitant rents. For many, this makes the best jobs seem inaccessible.

A decade of recession and an ongoing housing bubble has made it difficult for many young adults to get their foot on the property ladder. Hopefully, this will change – according to the Resolution Foundation, the homeownership rate increased for the first time in 2018.

Happy family playing in the bedroom

However, the national average for home-owning 25 to 34-year-olds still remains just over 25%. This is half the number of young home-owners in the 1980s. In London, the number is even lower.

A decade of recession and an ongoing housing bubble has made it difficult for many young adults to get their foot on the property ladder.

Renting follows this pattern, usually with the added hassle of a 12-month lease. In London, a recent survey by Rightmove found out the average rent was £2,000 per month.

While rent and house prices continue to stay unrealistically high for young renters, there are ways that companies can ease this burden.

By offering a solution to one of the biggest problems facing young professionals, companies can attract the top talent to areas of the country that would otherwise be seen as too expensive.

Employee accepts a job offer from a board of employers at an interview

Employer-provided housing – the solution?

It’s not the norm, but if you really want to address the main drawbacks of recruiting in desirable areas, your company could consider providing housing for employees.

You’ll probably be aware of this policy in some form. In fact, there are already professions where this is commonplace. Employer-provided housing is part-and-parcel of many jobs in hospitality and social care, where shifts are often long and irregular.

However, some corporations have started expanding this policy into the business sector. A prime example is tech companies in Silicon Valley, surrounded by infamously pricey homes in the San Francisco Bay area.

Woman at a tach company working at her computer

Facebook has invested $20 million (£15 million) in building new, affordable homes for employees. The project is building 1,500 homes in Facebook’s proposed mini-village, Willow Creek.

Another tech giant Google is following suit. They are in the process of building 10,000 affordable homes near Googleplex HQ. These houses provide an alternative to long commutes and sub-standard property, for the few people who land a place in company housing.

The details

So what does employer-provided housing actually entail? For Google and Facebook’s projects in Silicon Valley, homes are sold at a subsidised price to employees. In the UK, companies can sell or rent in a similar way.

It’s important to know what tax you will be liable for, as an employer. Providing housing comes with the added taxes and costs associated with living in the accommodation. This includes:

  • Furniture
  • Council Tax
  • Water and sewerage charges
  • Adequate repair, maintenance and decoration

Monopoly board showing electricity company

Legally, companies providing the accommodation will have to cover these costs. There are some exemptions to this rule. For example, if the employee is a relation, or employees have to live on-site as part of the job.

Think about agricultural workers living on farms, or hospitality staff living in a hotel or pub. Some teachers and care workers will also live on-site because they are on-call to supervise and care for others at night.

Companies are also exempt if they have to provide accommodation for security reasons.

What about other businesses?

If your business doesn’t fall into any of those categories, you have to report the accommodation to HM Revenue and Customs (HMRC), and pay the associated costs. There is an extra charge for properties over £75,000.

This policy is less common when it comes to offices in built-up areas. The reason behind this is probably because it’s usually not too difficult to commute daily to an office in Central London.

However, offering housing can give an edge to companies hoping to attract the best talent. Employees will value a company that priorities their wellbeing. You can do this by focusing on keeping working conditions the best they can be!

Family unpacks their possessions at a new homeThe definition of working conditions is: “the conditions in which an individual or staff works, including but not limited to such things as amenities, physical environment, stress and noise levels, the degree of safety or danger, and the like.”

Cutting down on a long commute, or helping secure adequate housing, improves working conditions and shows that you are the Best Boss.

Is rent tax deductible?

As an employer, you are nominally responsible for covering these taxes. However, you can set up rent payments as part of a salary sacrifice scheme. That’s when employers compensate an agreed salary reduction by paying an equal amount into a tax-free scheme.

As an employer, providing rent for workers is one of many possible fringe benefits to a basic salary. In the Oxford dictionary, the fringe benefits definition is: “An extra benefit supplementing an employee's money wage or salary, for example a company car, private healthcare, etc.”

It means employers can sidestep some of the usual National Insurance (NI) tax taken out of their usual salary. Instead, a portion can cover employee rent before it even gets to the pay slip.

Happy colleagues give thumbs up

This can take some of the hassle out of budgeting for rent, and helps your employees’ income stretch a little bit further. It can provide for your workers in a more well-rounded way.

Count me in!

If the idea of providing housing appeals to you, it might be worth conducting a survey in the workplace to see how popular the policy would be in reality. Before pushing ahead with the policy, get a feel of whether it would produce the increased employee engagement that you are expecting.

If you are looking for a streamlined way to get feedback in the office, Perkbox Insights is a simple tool that makes the whole process easier than ever. The service breaks down results into simple informatics, helping you to see how your colleagues are thinking quickly and efficiently. 

Creative office environment where colleagues are having a brainstorm

What are the alternatives?

It’s understandable that some companies won’t have the resources to guarantee housing for employees. This is especially a problem in urban areas like London, where the same skyrocketing house prices will affect businesses and flat-hunters.

For smaller companies or startups, it’s harder to justify this extra perk.

It’s not just a financial question. There is a worry that work/life balance will take a hit if employees spend their lives under company influence. The idea of living in a model village with only your colleagues can sound a bit dystopian… even to us here at Perkbox, where we pride ourselves on a great office environment.

We know it’s really important to ‘turn off’ every once in a while, and that might be much harder if workers are living in employer-provided housing.

There is a worry that work/life balance will take a hit if employees spend their lives under company influence.

However – all is not lost. We know you still want to be the best employer possible! If you want to attract talent by providing a more complete employment package, there are other ways you can spruce up that contract.

Healthcare

Providing a healthcare plan shows you value the wellbeing of your workers. Yeah, we know, healthcare plans can be expensive and cumbersome. Thankfully, we’ve got an answer to that.

Perkbox Medical combines all the best bits of the NHS with the ease of private healthcare. That means no waiting times – members can access GPs online, 24/7.

Prescriptions can be delivered any time, anywhere. Counselling, physiotherapy and x-rays are fast-tracked, helping your employees get back on track quicker.

Providing a healthcare plan shows you value the wellbeing of your workers.

This cuts down on employee absenteeism. Long mornings at the GP surgery, waiting for a 10-minute appointment, are a thing of the past!

Wellness

Healthy workers are happy workers, and will do better work for your company. With this in mind, many employers are trying to establish a culture of wellbeing in their office.

Group of people at an exercise class

When absenteeism is costing UK businesses an average of £522 per employee, it’s not hard to see that targeting this area of employee’s lives will have a huge ROI for businesses. Introducing gym memberships, exercise classes and cycle-to-work schemes in your office can be hugely beneficial.

Furthermore, make sure your workers have enough spare time in their day to actually use their gym membership!

Long shifts and mountains of work that keep your employees at their desks until late into the night will undermine all the perks you set up for them. Make sure they can maintain a healthy work/life balance, even during busy periods.

Introducing gym memberships, exercise classes and cycle-to-work schemes in your office can be hugely beneficial.

Perks

If you can’t help new employees find housing when they move to the big city, you can at least help them enjoy the bright lights! Help employers recharge on their days off with perks and discounts that will help stretch their salaries.

Group of friends enjoying dinner together

Perkbox offers a variety of perks that will make it easier for employees to budget their spending money against high rents.

It’s not just for weekend treats – members can spread the cost of big purchases over monthly installments, helping them budget for electronics or household goods. We also offer discounts on phone bills and parking.

There are many ways you can improve the overall working conditions of your employees. It goes without saying that many prospective employees would jump at the offer of housing included in their employment package. Many would take cuts to their salary for the security of a place to stay in today’s volatile housing market.

However, if the idea of providing employee housing is too daunting for your finances department, there are other ways you can make your employees feel at home.

Mother holds her sleeping baby at home

A great working environment and employee perks that will enhance their lifestyle will also attract top talent, and help your business grow.

Man shakes hand with employers at a successful interview

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