Should I rent or sell my UK property when I move to Oz?

[FifiJ]

Hi, I am moving to Australia in a year. I have been wondering whether I should sell my house in the UK or rent it out ? I know it has lost approx 15% of it's last valuation in 2008. I spent quite a lot of money extending and renovating the house. If I sell now I might get back just the total of what I bought the house for nine years ago plus what I have spent on it since. This would give me approx £30k after the mortgage has been repaid and estate agents costs etc.

If I rent out I will not cover the whole mortgage costs each month. I expect though that there would be tax deductable expenses . If I become a permanent resident in Australia after two years would I be liable to pay tax on my earnings from the rental in Australia or in the UK. If I didn't sell the house until I was a permanent resident in Australia would I be liable for any Capital gains tax either in the UK or Australia? (This all assumes that I will rent in Australia until then ) .If anyone has experience of moving to Australia and renting out their UK property I would be interested to hear about their experience and any advice /thoughts would be greatly appreciated.

[Guest scrumpy]

Were leaving in a couple weeks, and renting out all we have, so far so good, but time will tell

[FifiJ]

Thanks, yes best of luck with the move!

[ihanabell]

Hello there ,we moved to Vic in2010 ,we rented our uk home out .All good really but realised that without the equity from the sale of our UK home we will never afford an Aussie home without working 24/7 till we were 70 if the exchange rate was 1.5 or so. So returned back to uk hoping to see the dollar weaken to at least 2 to 1 before we could ever consider returning . Bottom line DO NOT COME OFF THE MORTGAGE LADDER in the uk because its going to be harder to get back on it if the Aussie trip does not pan out. Rent your house out and see in 12 months because Aussie cannot sustain the level of house prices it has and the housing bubble will burst sooner or later.

[FifiJ]

That is what I was afraid might be the case. Thanks for the advice.

[scarlett]

Hi, we rented our house out when we left for Oz. Sadly Oz didn't work out for us so when we returned we served our tenant her three months notice. Legally, tenants DO NOT have to vacate a property until the moment a bailiff arrives. My story is one of those horror stories you hear of but think its very unlikely- our tenant wanted a council house, the council advise tenants NOT to move out of a rented property (known as gatekeeping) as a result we had to go to court to get a court notice. We used a company which cost us £800 as we had no idea about property laws, the tenant was ordered to pay the court fees (around £200) but isn't obliged to pay them unless we pay to take her back to court! Again, the tenant isn't legally obliged to vacate upon the vacation date stated on the eviction notice, therefore we had to go back again to get a high court order to request the bailiffs to remove the tenant. We were lucky, the tenant left a few days before the bailiffs were due to go in but she caused nearly £2000 worth of damage (iron prints in carpet, holes in carpet, paint off walls, sink blocked, blinds broken and the place was FILTHY). In my case, the tenant wanted a council house but there are lots of loop holes in the law here regarding tenants and believe me, the law supports the tenant!! If the tenant fails to pay rent the procedure is pretty similar to mine. Estate agents are very reassuring about managing a property but in my experience its all a sales pitch! My advice would be to google tenant rights, see what exactly you're getting yourself into because we had no idea we would have no right to gain access to our house because legal contracts were exchanged (contracts actually mean nothing). Personally I would never ever rent out again, especially MY home. We have heard lots of horror stories about renting but equally I have heard a lot of success stories, it all depends on the tenants. It took us seven months to get our home back, in the business that was considered QUICK, most agents and solicitors expect it to take about a year or longer. We were made homeless during this time and myself, husband, four year old and newborn were put into a hostel without kitchen facilities (how we were suppose to make the baby's bottles is unknown) and ended up moving into my MILs, all four of us crammed into the box room with my four year old on the floor for seven months in total.

Edited August 17, 2013 by scarlett
Added more

[pacticenurse]

Hi, we rented our house out when we left for Oz. Sadly Oz didn't work out for us so when we returned we served our tenant her three months notice. Legally, tenants DO NOT have to vacate a property until the moment a bailiff arrives. My story is one of those horror stories you hear of but think its very unlikely- our tenant wanted a council house, the council advise tenants NOT to move out of a rented property (known as gatekeeping) as a result we had to go to court to get a court notice. We used a company which cost us £800 as we had no idea about property laws, the tenant was ordered to pay the court fees (around £200) but isn't obliged to pay them unless we pay to take her back to court! Again, the tenant isn't legally obliged to vacate upon the vacation date stated on the eviction notice, therefore we had to go back again to get a high court order to request the bailiffs to remove the tenant. We were lucky, the tenant left a few days before the bailiffs were due to go in but she caused nearly £2000 worth of damage (iron prints in carpet, holes in carpet, paint off walls, sink blocked, blinds broken and the place was FILTHY). In my case, the tenant wanted a council house but there are lots of loop holes in the law here regarding tenants and believe me, the law supports the tenant!! If the tenant fails to pay rent the procedure is pretty similar to mine. Estate agents are very reassuring about managing a property but in my experience its all a sales pitch! My advice would be to google tenant rights, see what exactly you're getting yourself into because we had no idea we would have no right to gain access to our house because legal contracts were exchanged (contracts actually mean nothing). Personally I would never ever rent out again, especially MY home. We have heard lots of horror stories about renting but equally I have heard a lot of success stories, it all depends on the tenants. It took us seven months to get our home back, in the business that was considered QUICK, most agents and solicitors expect it to take about a year or longer. We were made homeless during this time and myself, husband, four year old and newborn were put into a hostel without kitchen facilities (how we were suppose to make the baby's bottles is unknown) and ended up moving into my MILs, all four of us crammed into the box room with my four year old on the floor for seven months in total.

 

:-// that's awful to read! I've heard that the law in on the other side! It's so ridiculous!

I will too be renting our house out because with the house prices at min we just wouldn't have any money left over once bill etc were cleared! So it really is our only option for the time being.

I know u advise not to rent but would u advise to still go with an estate agent or do the rental agreements etc myself using solicitor to draw a (meaningless) contract up?

A good friend of mine might rent our house out but I still want everything done properly.

[FifiJ]

Yes this story is horrendous!

I live in part of the UK which makes my home ideal for Holiday Rentals rather than a Long term let , I have a friend who has just done this while waiting to sell her house, and I don't think she had any problems. I have no idea if a tenant for a holiday let would have any "squatters rights " or not.I sincerely hope not!

[scarlett]

Hi, I'm sorry I really couldn't advise. I have made friends with somebody else who also returned from Oz, she rented her house out to her sister.....she trashed it! They no longer speak and it has divided the family. We paid around £80 a month to our agents, as part of their agreement they were suppose to inspect our property every three months, it was first inspected nine months in....when I questioned it they said the tenant was having a difficult time and couldn't get an amicable time to allow the agents in- I was offered a £30 refund. When they did the first inspection nothing was noted, when my husband and I inspected the property a week or so after we found two holes in the lounge carpet- literally cut out holes! There were numerous issues but I believe the truth of the matter is the agents just want your money. Over the past twelve months, since our return I've spoken to various people who rent out their house.....they have all done their own contracts and reading between the lines I think (and this really is me reading in between the lines) they have rented to people who would be easy to remove should any trouble arise....illegally! Renting is a legal minefield....I feel your dilemma, I'm sorry I can't advise you but it really is all down to the tenant that walks throughout your door.

[Gbye grey sky]

If I rent out I will not cover the whole mortgage costs each month. I expect though that there would be tax deductable expenses . If I become a permanent resident in Australia after two years would I be liable to pay tax on my earnings from the rental in Australia or in the UK. If I didn't sell the house until I was a permanent resident in Australia would I be liable for any Capital gains tax either in the UK or Australia? (This all assumes that I will rent in Australia until then ) .If anyone has experience of moving to Australia and renting out their UK property I would be interested to hear about their experience and any advice /thoughts would be greatly appreciated.

 

 

Tax deductible expenses would include the mortgage interest though not any capital repayments. If you were planning on long term renting your home worth considering switching to an interest only mortgage which will cut down monthly outgoings for you. You may also benefit from negative gearing in Australia where any shortfall between rent and expenses can be offset against tax payable on salaries. Expert advice recommended. Capital Gains would not arise if you returned and lived in the property for a number of years but may apply in Australia on any future sale but the property would have had to show a healthy profit I suspect. I have no real knowledge of Australia tax so take this as some general pointers only and get proper advice.

[FifiJ]

Thanks for the advice

[Rupert]

Hi, I am moving to Australia in a year. I have been wondering whether I should sell my house in the UK or rent it out ? I know it has lost approx 15% of it's last valuation in 2008. I spent quite a lot of money extending and renovating the house. If I sell now I might get back just the total of what I bought the house for nine years ago plus what I have spent on it since. This would give me approx £30k after the mortgage has been repaid and estate agents costs etc.

If I rent out I will not cover the whole mortgage costs each month. I expect though that there would be tax deductable expenses . If I become a permanent resident in Australia after two years would I be liable to pay tax on my earnings from the rental in Australia or in the UK. If I didn't sell the house until I was a permanent resident in Australia would I be liable for any Capital gains tax either in the UK or Australia? (This all assumes that I will rent in Australia until then ) .If anyone has experience of moving to Australia and renting out their UK property I would be interested to hear about their experience and any advice /thoughts would be greatly appreciated.

 

Initially we did not sell, partly to keep a safety net if it did not work out, partly because we had just renovated and were very fond if the house and partly because it would have meant a large loss and then a poor exchange rate anyway. So we rented and it as been trouble free up until this tenant who is a bit patchy with paying rent, although we are up to date now.

 

As you mention you would get back what you paid, this seems like an acceptable financial outcome, so I would consider the emotional reasons of whether you want a safety net, if you come back would you want it to be that house you come back to and this is particularly relevant seeing as you imply you are on a temporary visa, so coming back is a very real possibility.

 

If you become a permanent resident of Australia, you still declare the rental income and expenses in UK, but the difference is you declare in Australia as well. Any tax you paid in UK would be put onto your Australia return as a credit so you don't get taxed twice. If you didn't pay tax in the UK because it is under the allowance, then it ends up being fully taxed in Australia as a permanent resident.

 

Your mortgage payment wont be tax deductible, only the interest your mortgage company charges you is tax deductible. Don't look to increase your interest just to get a bigger tax deduction, that is a bit like refusing an hourly pay rise because you will pay more tax.

 

CGT depends on whether you have a second house more than anything else. If you only ever own one property at a time there is no way you could have a CGT issue arise. In any case though, you have to make substantial profit for it to really impact you after allowances etc.

Edited August 17, 2013 by Rupert

[FifiJ]

Thanks for this advice. I will be on a 457 visa as a GP , and sincerely hope to become a permanent resident after two years. If I did return to the UK ,I wouldn't be able to get my old job back or live in the old house . There is no emotional tie to the house for me, it is purely a question of what seems sensible in the current economic climate. I doubt the value of the house is going to rise substantially in the next three years as I don't live in the South East of England/London area.In fact sometimes I think I might want to sell the house so that I make a clean break and IF I had to return to the UK wouldn't have to worry about owning a house in a different part of the UK to which I will have to work. Also in the current climate it could take some time to sell I guess.

[rammygirl]

Why wait 2 years for PR. you can get it now if you are a GP surely?

[FifiJ]

not according to the company who are sponsoring me, I get a 457 visa and after 2 years am eligible to apply for Permanent Residency apparently.

[rammygirl]

Like I said inform yourself read the info on ENS on the link I gave you they can apply for Pr from day one if you pass a skill assessment first. The 457 is not a guarantee for PR just negates the need for a skill assessment after two years. No guarantee you will still be employed then or they will sponsor you for the PR.

 

if you need independent advice consult an agent not appointed by the company.

the rout proposed is just one of the possible ways you can get PR not necessarily the best.

Edited August 17, 2013 by rammygirl

[Rupert]

You are being told a load of rubbish.

 

Many people move to Australia without ever having set foot in Australia, never mind having worked their for two years. I think your employer just wants to make sure you are tied to them after sponsoring you. But certainly a) they could sponsor you for a permanent visa straight away and b) you could get your own permanent visa straight away without their sponsorship.

[rammygirl]

Oops sorry mixed up my replies with a similar thread about 457 but it does apply look it up on govt site

[FifiJ]

I will have to bring this up with the company involved. I am older than 45 , but my skills mean I might be excepted on age ,plus there is obviously a shortage of GPs

[Rupert]

I will have to bring this up with the company involved. I am older than 45 , but my skills mean I might be excepted on age ,plus there is obviously a shortage of GPs

 

 

OK so skilled migration would be difficult for you now, as it is hard to pass the points test after age 45, it is worth a look though..

 

But permanent employer sponsorship is open to applicants up to 50 with no need for any exceptions or special circumstances. I really would push for this sooner rather than later .. how much over 45 are you?

 

Perhaps you could ask them to go down this path and arrange the contract such that you reimburse them if you leave within two years say, the reason they want you on the 457 first is to get their money's worth so to speak. Employers don't want to sponsor someone only for them to bugger off as soon as they get the permanent visa, so negotiating something for their peace of mind might be worthwhile.

[FifiJ]

I will be 46 almost 47 when I move to Oz next year. I have signed a 5 year contract with the company ,which has a "get out " clause on both sides at the end of the first year.I will ask the recruiting /sponsor the question though, as I would like the added security from day one, plus I would like to buy property in Australia if I am settling.

[Rupert]

I will be 46 almost 47 when I move to Oz next year. I have signed a 5 year contract with the company ,which has a "get out " clause on both sides at the end of the first year.I will ask the recruiting /sponsor the question though, as I would like the added security from day one, plus I would like to buy property in Australia if I am settling.

 

Yeah, really you should go for PR at 47. You might not get on with your employer and they might just decide not to sponsor you for PR in two years, you might change employer (transfer sponsorship for personal reasons) or the rules might change and they are not able to sponsor. Any kind of delay and once you have your 50th birthday and you would need 4 years on the 457 visa too. Bottom line is you are too old to be messing around with 457 visas, not when there is another option, I mean.

 

ETA: and if you are not going until next year, there is no need to go for 457 in interests of speed. The permanent employer sponsored visa will take 6 months or so I believe.

Edited August 17, 2013 by Rupert

[FifiJ]

ok looks like I am going to have to do some negotiating here.Thanks for the advice.