littlekitty Posted March 19, 2013 Share Posted March 19, 2013 Hey guys, My fiance © and I are waiting on a PMV at the moment and are keen to do some property investing in Aus once we're on our feet with the visa etc. When I was visiting him in England I couldnt believe the house prices (obviously the market is not the best over there, and people are not in a position to buy) but with the money we earn in Aus, I thought 'why couldnt we buy something in England'? C owned his first home from about 21 years old, and I was shocked when he drove me past a little terraced house and said "that was the house I sold to come to Australia"... In my opinion, it would have great for him to hold onto it (he regrets selling it) so that we could use it when visiting his family. Even though I am a total novice in prpoerty investment, I cant see the harm in buying a cheap (well, by Aus standards!) house in his home village in South Yorkshire, renting it out, and use it when the tenants lease is up to go visit his family from time to time. I know my family would jump at the chance of using the house say, one week a year. Also, C has had two deaths in the family this week, and although he can go stay with family when he travels to England, he said it would be nice if he could stay at his old house as a base. Anyone done anything similar? I cant see much risk in buying property that would amount to about $60,000AUD and have it sit there to use on occasion? Or am I totally missing something here? Would it be very difficult to do this process from Aus? Link to comment Share on other sites More sharing options...
Ausborn Posted March 19, 2013 Share Posted March 19, 2013 i am buying a house in the uk next year. Take advantage while we can with the way everything is i reckon. Working in oz for 2 years just about gives us the money to buy what we want in the uk. Live off one wage, save the other. Very handy to have one there for the future. I was the same when I was there last year, I looked around, Could not believe how cheap you could buy property. When you think what we earn in Australia , can save and buy outright with no mortgage. Link to comment Share on other sites More sharing options...
flag of convenience Posted March 19, 2013 Share Posted March 19, 2013 All well and good if have family to step in when trouble brews. Management companies can be pretty useless beyond finding renters. I could give you a few recent examples of having to folk out a considerable amount of money getting repairs done and having dodgy renters. As for using the places ourselves hasn''t worked yet as don''t want to dislodge good tenants which seem to be the case when we would want to use it....while not so good ones we tend not to be in a position to go over. Link to comment Share on other sites More sharing options...
Chortlepuss Posted March 19, 2013 Share Posted March 19, 2013 Houses do look cheap in the UK at the moment, and much more value for money than Australia - If I can get some spare $, I would look at buying more property in UK. Tread carefully though - you need good tenants, it is very expensive to maintain at a distance, managing agents tend to be pretty cr@p, and you will be slammed, absolutely slammed for tax in Australia if you declare your rental income (many don't) and are viewed as making a profit. As a an example, my mortgage in the UK is nearly paid, the interest on the mortgage is rock bottom and although the monthly mortgage payment and the rental income are the same, the vast majority of my rental income is viewed as profit by the ATO - I'm not making any real money on it (apart from capital appreciation of the property - yeah right) but I am taxed heavily - Conversely if you make a loss on the property (which you may well do if the interest proportion of your mortgage is high, or you have an interest only mortgage) and you are paying out a lot on bills, then this can be negatively geared against your Australian tax return. Hope this makes sense - thing is, get some decent financial advice if you do this... Link to comment Share on other sites More sharing options...
NickyNook Posted March 19, 2013 Share Posted March 19, 2013 It's not really feasible to let out a rental property AND expect it to be available whenever you (or your family) want to use it. Are you going to kick your tenants out once a year and then go through all the hassle of finding new ones just so a family member can stay there for a week? What if a good tenant wants to stay on and sign a new lease at the end of their current one? Will you refuse them because you want to stay there for a couple of weeks? Either the property is available for rent to tenants OR you keep it empty for your own use. There's no feasible in-between. Link to comment Share on other sites More sharing options...
flag of convenience Posted March 19, 2013 Share Posted March 19, 2013 Houses do look cheap in the UK at the moment, and much more value for money than Australia - If I can get some spare $, I would look at buying more property in UK. Tread carefully though - you need good tenants, it is very expensive to maintain at a distance, managing agents tend to be pretty cr@p, and you will be slammed, absolutely slammed for tax in Australia if you declare your rental income (many don't) and are viewed as making a profit. As a an example, my mortgage in the UK is nearly paid, the interest on the mortgage is rock bottom and although the monthly mortgage payment and the rental income are the same, the vast majority of my rental income is viewed as profit by the ATO - I'm not making any real money on it (apart from capital appreciation of the property - yeah right) but I am taxed heavily - Conversely if you make a loss on the property (which you may well do if the interest proportion of your mortgage is high, or you have an interest only mortgage) and you are paying out a lot on bills, then this can be negatively geared against your Australian tax return. Hope this makes sense - thing is, get some decent financial advice if you do this... Yep you are correct.Many forget the tax inplications. Only a matter of time before the ATO is made aware by Inland Revenue of any financial gain. It is not a tax free measure that will allow one to stay home. But the costs around home ownership in another country can be rather step. Link to comment Share on other sites More sharing options...
dxboz Posted March 19, 2013 Share Posted March 19, 2013 Another thing to consider is that you will have to pay monthly council tax on the property if it furnished and unlet for any time. You can usually get a discount if the property is unlet and unfurnished but then again if it is unfurnished it would not be suitable for your own use. Link to comment Share on other sites More sharing options...
fourcorners Posted March 19, 2013 Share Posted March 19, 2013 We rent out our UK house, which is in a great position in Cornwall, but I would never dream of kicking my tenants out so I could stay there when we visit! We are visiting at Easter and may go and look around for an inspection but beyond that we'll leave it alone. Whilst they're in there, it is their home. So far we've had good tenants, two different sets with 2 months unoccupied in between. I am on a 457 visa and had to do a UK tax return because we earn income from the house (although last year none of it was profit). We will be speaking to a financial advisor when we go back to see if we can get another mortgage but I already know it won't be as straight forward as we're living overseas and already have one property there. Link to comment Share on other sites More sharing options...
Chortlepuss Posted March 19, 2013 Share Posted March 19, 2013 I am on a 457 visa and had to do a UK tax return because we earn income from the house (although last year none of it was profit). We will be speaking to a financial advisor when we go back to see if we can get another mortgage but I already know it won't be as straight forward as we're living overseas and already have one property there. Keep us posted on that one. The sensible thing for us would be to remortgage to release equity from our home, get another property to rent out and increase our losses. But it's a minefield and I'm also scared of potential capital gains tax (goes over my head a bit). Don't want to pay ATO any more than I have to! Link to comment Share on other sites More sharing options...
Guest littlesarah Posted March 19, 2013 Share Posted March 19, 2013 Personally, I wouldn't invest in property unless I could get it at the right price and at the right time, though it's hard to know exactly when the 'right time' is. I wouldn't invest in property myself while I have a mortgage on my own home - I would rather pay less interest on where I live (seeing as interest accounts for a large proportion of the cost of borrowing to buy a property). According to some of the things I've read, over a 30-year timeframe property has historically yielded a lower return compared to other investments (e.g. stocks and shares), and looking at my own mortgage I can see that it's unlikely we'd ever actually make a significant 'profit' on our home (once you factor in mortgage interest, maintenance, renovations, etc) - we bought a house because we want to make something that we like, and because the location is just what we were after. Link to comment Share on other sites More sharing options...
fourcorners Posted March 19, 2013 Share Posted March 19, 2013 Personally, I wouldn't invest in property unless I could get it at the right price and at the right time, though it's hard to know exactly when the 'right time' is. I wouldn't invest in property myself while I have a mortgage on my own home - I would rather pay less interest on where I live (seeing as interest accounts for a large proportion of the cost of borrowing to buy a property). According to some of the things I've read, over a 30-year timeframe property has historically yielded a lower return compared to other investments (e.g. stocks and shares), and looking at my own mortgage I can see that it's unlikely we'd ever actually make a significant 'profit' on our home (once you factor in mortgage interest, maintenance, renovations, etc) - we bought a house because we want to make something that we like, and because the location is just what we were after. That's interesting because when I spoke to an accountant regarding pensions advice, he told me that property is by far and away the best investment. I don't really think the buying/selling profit is what he's talking about either. It's more about renting and getting someone else to pay the mortgage effectively, and in the long term you're left with property which can yield either a large lump sum once it's paid off or income from tenants. Earning more in Australia, means you may be able to send off larger sums to pay down the balance on your mortgage, which over time means you pay far less in interest than if you just paid the minimum repayment amount. I think by the time we pay off our mortgage we will have saved about GBP200k in interest alone by paying it off early. Then once it's paid off the rental income from that can go towards another property's mortgage, hopefully our family house in the future. Link to comment Share on other sites More sharing options...
newjez Posted March 19, 2013 Share Posted March 19, 2013 Living in Oz and buying property in the UK is a no brainer - as long as you are looking medium to long term. Only problem as many have experienced is it's hard to deal with when you have problems. You need a good property manager, or good relatives who will help you out. Without those it can become a headache. Normally I would advise to invest somewhere close to where you live. Link to comment Share on other sites More sharing options...
littlekitty Posted March 19, 2013 Author Share Posted March 19, 2013 I wouldnt dream of kicking anyone out of the house, but I merely thought that if the rental market was a bit flat and we had gaps in tenants then we would utilise that time. On the other hand, I've done some reading and it looks like trying to buy the house outright is the best way to go... perhaps save for a couple of years and then buy. We think we might do that... fiance joked that we can keep it and retire in it down the track! haha! Having good reliable relatives on the other hand, ha, well that might make things difficult...... Link to comment Share on other sites More sharing options...
Supercad Posted May 6, 2013 Share Posted May 6, 2013 i am buying a house in the uk next year. Take advantage while we can with the way everything is i reckon. Working in oz for 2 years just about gives us the money to buy what we want in the uk. Live off one wage, save the other. Very handy to have one there for the future. I was the same when I was there last year, I looked around, Could not believe how cheap you could buy property. When you think what we earn in Australia , can save and buy outright with no mortgage. Hi Ausborn it seems your the only one that has post that is on topic is it possible you could elaborate a bit on how you done it IE did you got through an agent? what did that bank want and from what country? Link to comment Share on other sites More sharing options...
Flathead Posted May 7, 2013 Share Posted May 7, 2013 As far as I know if you buy an overseas property but have not lived in it you will be liable for Australian CGT as soon as you move back or sell it....on the increase in value in Australian dollars.....so if house prices rise and the dollar loses value you will be hit with a double whammy....take proper advice. Link to comment Share on other sites More sharing options...
Supercad Posted May 7, 2013 Share Posted May 7, 2013 looks like my next job could be Europe based so id possibly be living in it, that the plan at the moment anyway Link to comment Share on other sites More sharing options...
fourcorners Posted May 7, 2013 Share Posted May 7, 2013 As far as I know if you buy an overseas property but have not lived in it you will be liable for Australian CGT as soon as you move back or sell it....on the increase in value in Australian dollars.....so if house prices rise and the dollar loses value you will be hit with a double whammy....take proper advice. This probably depends on what type of visa you have. I'm on a 457 visa and we don't have to declare income from UK property on our Australian tax return. Interestingly when we were back in the UK recently we visited our bank to look into the possibilities of getting another property. We already have a mortgage with them and have been overpaying on that as such we now own 75% or so of the property. They advised us that since January this year they have stopped doing mortgages for expats, and couldn't even bend the rules for us given we have excellent history on our current mortgage. I think other banks may still do expat mortgages but if we went down that route we couldn't use the equity in our current property to secure the second mortgage. Currently we're due to pay off our current house in October/November this year and I guess we'll just start saving after that and hope they change the expat mortgage rules by the time we have a decent deposit. Otherwise we'll need a fair whack of employment history in the UK before we can get another mortgage there. Link to comment Share on other sites More sharing options...
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