Providing accommodation to employees: perk of the job or fraught with risk?

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Due to the ever-rising cost of living and soaring property prices across the UK, the goal of owning a property is becoming increasingly unattainable for many young people. There is an inherent shortage of affordable homes, particularly in rural and seaside towns in areas such as Cornwall, North Wales and East Anglia.

As a result, many employers are resorting to purchasing properties in a bid to house, attract and retain employees who would otherwise migrate to larger cities for work. However, both employer and employee should pause to consider whether such an arrangement is a wise idea.

The main issue for employers to consider is whether providing accommodation for employees may result in those employees being granted certain rights in that property, in particular, the right of security of tenure (i.e. the right to remain in the property). We explained this in more detail in this article for The Guardian.

What’s clear is that whether you are the employer or employee who is considering entering into such an arrangement, you should ensure that the arrangement is properly documented so that the position is clear from the outset and both parties understand the implications.

This minimises the likelihood of having to resort to seek resolution from the court which is expensive and time consuming. However, whether the arrangement is a service occupancy or service tenancy will depend on the circumstances of the employment – simply labelling the agreement between the parties as a service occupancy agreement does not automatically determine the nature of the arrangement.

If you wish to discuss this in more detail, please don’t hesitate to get in touch at d.sheppard@capitallaw.co.uk.