Home swappng without property or mortgage swaping

Hi pinsters,
I was thinking there this morning about all the people I know, who because of mortgage commitments, negative equity and I suppose other reasons are unable to move from where they currently live. The most commonly taken option is to rent out the home and move in to another rental property. So many people seem to be seeking to do this.

There are two problems that can make this difficult.
Firstly many of the dedicated rental properties are of really poor quality. If you are really lucky you might find someone who is in a similar situation to oneself and are renting out their own home, a place that they have lived in, a place in which some care and attention has been paid to decor, fittings and general maintenance - a place you might be able to call a home in turn. As I said you need to be lucky to find these.

Secondly, renting out property is hassle. PRTB reg is required and more importantly tax considerations are a real pain. You pay your rent to your landlord, he/she makes their allowed deductions and then pay tax on the balance. Now if your landlord is again someone similar to yourself who is renting out their ex-home as they now live in a more suitable rented property they will in turn be paying rent to some other landlord which will ultimately be taxed again. The government is a real middle man in these transactions and taking their due on each leg of the transactions.

So would it not be simpler if for these renter-uppers that the two parties simply just moved into each other’s houses with an agreement that ownership is not transferred and they simply keep on paying their own mortgages? There is no financial transaction. Nothing to tax. Only a mutually beneficial convenience transaction. You can even agree that most mail - including the all important mortgage account letters still go to your property (those tricky bankers would love any excuse to kick you off your tracker).

So what about that idea? I was wondering if it would be possible to set up some sort of website which might match allow people to simply trade ‘homes’ by simply swapping furniture really. It might solve a lot of problems. Now some might argue that if the houses are clearly of different value there might be an argument for some sort of difference payment to be made between the parties on a monthly basis. Perhaps but I reckon folks should not worry about that - people should only do the swap if it works for them as is. It may not work for many but it may work for some.

First you would both be hit by the Non principal private residence tax. Next when some grifter swaps house with you then falls down your stairs and his wife slips on a wet floor, you will start having a few problems.

NPRR tax. Yes you would have to pay this according to the definition of NPRR. But if you were going to rent out your house you would have to pay this anyway. Regarding liability in the case of accidents then you would need some sort of insurance which again if you were renting you would need to have anyway as the same problem exists.

The arrangement I am thinking about does not introduce any new gotchas over those you might incur through renting your property out formally anyway.

I am really talking about a barter system that allows mobility without incurring the financial friction associated with renting. There is a rental agreement I suppose but no money changes hands. Obviously it is only for the special case where two home owners are looking to rent. A match making service might hook such pairs up and if they can work something out then great. If not then there is always the conventional rental market waiting for them.

Maybe it would be simpler to try and convince both banks to accept the other house as collateral? If everyone agreed that the houses were of similar value then they might be open to the idea. Even better if it is the same bank involved for both mortgages.

Well yes that could work too in terms of solving the problem I am talking about BUT its a very permanent solution. I am more thinking of something that might suit people in the shorter term. It allows people with property to go into renting again without incurring quite so much hassle as becoming land lords. They could move home a number of times under the proposed arrangement. One might argue that they are still landlords even in this scenario but I would argue that the are in a fairly symmetric relationship with their tenants which might mean a lot less hassle and bother for all.

Having said that I think you idea of property swaps between the banks involved in order to facilitate mortgage holders who need to move is something banks should seriously look at. Its a good idea…very good even. It would be an easy way for some of these banks to show a little humanity. People could do a short term house swap initially to see if everything is kosher with the new gaff and if after a few months all is good then do the full collateral swap.

Something like this?

homeexchange.com/listings.ph … 4573&all=1

yeah like home exchange but not that short term! Also I would imagine most people will take their furniture with them and have utility bills changed etc i.e. just like any other rental.

I tnink the Banks should start a trading shop in homes
Say you have a home in Galway, cost 1m, you llose your job or take pay cuts and can no longer afford the payments, so you give the bank back the home, and they give you a home in the area that some one else has handed in worth say 700k that you can afford the payments on. and so on down the line, The folks at the bottom go back to renting where they probably should have been to begin with and the banks end up only holding the higher value homes that with a reduction should be easier to off load

Yeah, that’s a possibility. Sounds like it might cost money to run and I doubt banks are going to go as far as doing anything that costs them money in terms of customer service. Still it’s the type of thinking that might creatively solve problems for some.