Renting your property out in Uk

**carlymac** · 04-07-2008, 09:20 PM

Hi Everyone
I know this may be a bit of a silly question, has anyone rented their property out in the uk rather than selling and if you did can you release the equity to take with you?
Thanks everyone

**IAN NINA & GEORGE** · 04-07-2008, 09:38 PM

we are looking into this this at the moment so we can get bck out to perth asap we went to activate our visas the other week

**KazzE** · 04-07-2008, 10:43 PM

The short answer is YES
We are going to remorgage and take some of our equity, I want to try and take as much as we can without making the repayments too high, I want the rent to cover our costs - morgage, insurance and agent costs
BUT there are a lot less morgages around and you need around 25% deposit or the lenders will not even look at you however low a risk you are (according to our morgage broker)

**Phoenix** · 04-07-2008, 11:54 PM

Originally Posted by KazzE

The short answer is YES
We are going to remorgage and take some of our equity, I want to try and take as much as we can without making the repayments too high, I want the rent to cover our costs - morgage, insurance and agent costs
BUT there are a lot less morgages around and you need around 25% deposit or the lenders will not even look at you however low a risk you are (according to our morgage broker)

speak to a financial advisor about offsetting, this way you can take out a 75% mortgage on your house keep all the equity in an offset account and pay no more than a mortgage at your current equity level.

The advantage of offsetting is that the cash is in a liquid form so you can use it as you need it, or leave it there to offset the mortgage.

**Lisa&Martin** · 05-07-2008, 09:09 PM

Both KazzE and Phoenix make good points, but maybe I can add more details:

1) your current mortgage lender would expect you to change to a BuyToLet mortgage in order to allow letting. Most of these mortgage products require you to have at least 20% to 25% equity in the property, and they will also require a lettings valuation from a lettings agent. The idea is that each monthly rental income will cover approx 110% of each monthly interest payment on the mortgage (the percentage will differ from lender to lender). Be aware that many BTL mortgages are at slightly higher interest rates than your average mortgage (the bank see it as higher risk as it's effectively a business enterprise).
2) However, on occasion your current mortgage company may give you permission to rent for a fixed period without asking you to change the mortgage type. They are unlikely to do this, however, if you want to release equity.
3) Whilst offset mortgages are a marvellous thing and can be very flexible, they are often not allowed on BTL properties. Woolwich, for example, restrict them to owner-occupied. I think from memory C&G used to be more flexible. If you don't understand offset mortgages have a good hunt around the web and there are some good explanations, I think Intelligent Finance has a good site on this.
4) Be aware that it is only the INTEREST element of any mortgage that can be charged against your rental income for tax purposes, ie not the whole amount if you are on a repayment mortgage. Therefore it often makes sense to change the mortgage repayments to interest only.
5) In your calculations expect to have the property rented for only 10 months of the year. This is average, the rest of the time it is either between lettings or someone is signed up but not able to move in immediately due to job / current letting contract expiring.
6) Look for a regsitered agent, eg with ARLA. there's a great site called Landlordzone, have a search for threads where new landlords are looking for start-up advice and you'll get a whole list of do's and don'ts.
7) Feel free to send me any questions as a PM if you get stuck!

**Pinhead** · 05-07-2008, 09:14 PM

Hi Lisa&martin
Just spotted where you are, I live in Farnham Royal!

**KazzE** · 05-07-2008, 09:28 PM

Great info and advice thanks I will talk to him about offset

There is so much to take on board with letting out which is why it is my last option, but it is looking more and more like our only option due to lack of viewers let alone buyers!

Karen X

**Lisa&Martin** · 05-07-2008, 09:29 PM

Well hello there, pinhead-down-the-road! We are applying to move to Sydney on a 163 business sponsorship visa and had our state sponsorship approved on Friday. So it's been a happy weekend! I figured since this whole 'moving to the other side of the world' thing is about to get more real I might as well learn a bit more about it, hence am starting to trawl some web forums. We currently run a business consultancy (very transportable to Oz) but have also been letting properties for about 10 years. We sold 3 houses last years in preparation to go, but still have 7 left.....That was meant to be the capital to take with us. Oh well! So even I am now looking to try out some letting agents, figure I might as well sort out a good one sooner rather than later. Having done lettings for a while though I do know the pitfalls and it's a bit scary leaving all your valuable property to some agency to look after. I've read many a nightmare story on Landlordzone. Send me a message and tell me ALLLLLL about yourself....

**Phoenix** · 05-07-2008, 09:40 PM

There are BTL opportunities in offsetting, if your FA cant identify them drop me message and ill put you on to an FA that can.

**7gotooz** · 07-07-2008, 09:21 AM

Hi Guys

A quick question about a worry we have - if you rent out your UK home -the rent is a taxable income does that mean if we sell the house in a couple of years (when the market improves) will we be liable for Capital Gains Tax on the profit of the sale & does anyone know what % CGT is?

I asked in the Inland Revenue office here in London & was told there was no one their who was qualified to answer that question !!!!!!LOL

Take care

Rachel