Letting property in UK

pabloke99 · 09-05-2008, 10:14 AM

Hi all, we shall be letting a property back in the UK while we live in OZ. Has anyone doing this had any difficulty with mortgage lenders or letting agencies? Not sure whether to have all correspondence sent to friends/family in UK or whether to deal direct once we have a permanent address in Australia. Also, concerned that there may be problems when the mortgage deal is up for renewal in a couple of years time, but hopefully by then the market would have recovered sufficiently enough for us to sell up and buy in Oz, assuming we like it.

Pinhead · 09-05-2008, 10:38 AM

When I went to Oz last time I was going to let my house.
Everything was fine except the EA didn't carry out the electrical inspection until after I left. They then told me that because my lighting circuit wasn't earthed and I didn't have a new 'trip' fuse box that I couldn't let my house until I had it rectfied.
The EA electrician wanted £4K to do the work! Bearing in mind that I would probably only have cleared £5K pa I said sod it I'll come home and sort it out. After speaking to my next door neighbour who was a sparky I managed to get the whole thing fixed for around £200.
That is the risk you run, people will take advantage of you because they know you are so far away.
And this was using the fully inclusive EA service charging 15% + VAT of my rent, it was supposed to be 'hassle free'.

EA have to deduct tax at the basic rate before paying over the money to you unless you get a certificate from the IR.
You need to get the right insurance for your property if you let it out (landlords insurance) and consider getting insurance cover for people defaulting on the rent.
I think you may struggle to re-mortgage your property remotely depending on who you are mortgaging with (proving income, not being a resident,etc). You'd be better off sticking with your exisiting provider and budgeting for a higher interest rate IMO.

PS The electrical check unlike the gas one was not compulsary I was just trying to be a good person, look where that got me!

Aussie girl wanna be · 13-05-2008, 10:03 PM

Hi Guys,

I also wanted to know if anyone has had experience of changing their repayment mortgage to a interest only BTL mortgage? Do you have to leave much of deposit? I have heard that you may have to leave 20% of the mortgage value, is that right?

Sorry for the questions
L

Pinhead · 14-05-2008, 10:23 PM

The banks rules on the deposits required have tightened a lot recently, 20% doesn't seem unreasonable considering some are requiring 10% for a repayment mortgage on a home.

Trillion195 · 27-05-2008, 11:52 AM

Paul & Lisa
Been in Oz 7 months now and having tried to sell, decided to rent out UK property with local letting agent. Things to bear in mind...11% for full management service, 22% tax (which the letting agent is legal bound to deduct) plus, plus. Be sure to know how the letting agent intends to adminster your tax back to taxman. You can offset tax paid with expenses to rent out, council tax paid whilst property available to rent. Insurance for tenants differs from owner occupation..not as simple as I first thought, but its all cash..best of luck. T

Pinhead · 27-05-2008, 12:26 PM

Quote:

Originally Posted by Trillion195

Paul & Lisa
Been in Oz 7 months now and having tried to sell, decided to rent out UK property with local letting agent. Things to bear in mind...11% for full management service, 22% tax (which the letting agent is legal bound to deduct) plus, plus. Be sure to know how the letting agent intends to adminster your tax back to taxman. You can offset tax paid with expenses to rent out, council tax paid whilst property available to rent. Insurance for tenants differs from owner occupation..not as simple as I first thought, but its all cash..best of luck. T

You can get your rent paid gross you just need to get clearance from the IR and pass the certificate to your Estate Agent, probably easier to do before you go.

Some Estate Agents charge 15% + VAT for their full service so shop around.

Deduction should now be 20% not 22% as the basic rate of tax was lowered in April.

up4answers · 27-05-2008, 01:40 PM

We're coming out in August and renting our house because it's lost money.

You only have to pay tax on the rent you take if you are continuing to pay off your capital.

We've switched to interest only for 2 years. The money we take in rent is £200 short of the mortgage, so this means we're not actually profiting from renting it out and therefore we don't pay tax on the rent. We'll make up the shortfall from Oz.

We didn't tell the mortgage company we planned to rent it. Just take out a residential mortgage, get it all signed sealed. Then contact them a month later saying your circumstances have changed and you'll be letting the house out. They'll charge about £100 for the hassle and then you're cool to go.

Sometimes you have to play them at their own game. After all, our house cost £200k, over the life of the mortgage we'll pay back £450k.

I'm sorry, but what's good for the goose is good for the gander. Screw 'em back!!!

pabloke99 · 27-05-2008, 05:45 PM

Quote:

Originally Posted by up4answers

We're coming out in August and renting our house because it's lost money.

You only have to pay tax on the rent you take if you are continuing to pay off your capital.

We've switched to interest only for 2 years. The money we take in rent is £200 short of the mortgage, so this means we're not actually profiting from renting it out and therefore we don't pay tax on the rent. We'll make up the shortfall from Oz.

We didn't tell the mortgage company we planned to rent it. Just take out a residential mortgage, get it all signed sealed. Then contact them a month later saying your circumstances have changed and you'll be letting the house out. They'll charge about £100 for the hassle and then you're cool to go.

Sometimes you have to play them at their own game. After all, our house cost £200k, over the life of the mortgage we'll pay back £450k.

I'm sorry, but what's good for the goose is good for the gander. Screw 'em back!!!

This is what we intend doing when we move out in Oct/Nov, good to hear that the mortgage company are OK with the plan. Mind you, it's not in their interest to prevent you from renting - as long as they get their money they should be OK

the hutchies · 27-05-2008, 06:13 PM

Quote:

Originally Posted by pabloke99

Hi all, we shall be letting a property back in the UK while we live in OZ. Has anyone doing this had any difficulty with mortgage lenders or letting agencies? Not sure whether to have all correspondence sent to friends/family in UK or whether to deal direct once we have a permanent address in Australia. Also, concerned that there may be problems when the mortgage deal is up for renewal in a couple of years time, but hopefully by then the market would have recovered sufficiently enough for us to sell up and buy in Oz, assuming we like it.

Hi pabloke
you bet me to this thread. we was looking into renting our house out come xmas if it hadn't sold!! We really don't want to go down this road because i think it would be a hassle but if that's the way we have to go than so be it, so fingers crossed we get another buyer that doesn't pull out.
Wish i could win the lottery then no worries.
lisax

pabloke99 · 27-05-2008, 07:34 PM

Yeah, there are a loads of us in the same boat. Good Luck with it all.