ItchyFeet76 Posted February 4, 2014 Share Posted February 4, 2014 When I was a kid our neighbours sold up and emigrated to Aus. They were back about a year later... The problem was, in addition to spending some of their cash while they were in AUS, UK house prices and GPBAUD FX rates had moved; so while they sold a fairly nice house when they left the UK, they moved back into a flat in a horrible (and I do mean, horrible!) area where they lived until they died. I guess the moral is always cover your a$$. This is one of the "cons" of renting whilst on a 457 (as will be our case, hopefully). We risk losing our foot on the UK property ladder if we do return. That said, we've done the sums and, allowing for prices to continue to rise during our absence, we will always be able to afford something in our lovely little market town (Market Harborough, Leics) - and probably in the same area where we're currently living - but it may not be a brand new 4 bed detached! If we stayed we'd have to double our mortgage term to 35 years so that the rent just covers the mortgage, pay £12'690.24 (over 4 yrs) in rental costs (which may well increase if we get more than £300 repairs per yr or more than 1.5 mth's unoccupancy per year), plus the £16k Aus rental costs (over 4 yrs), so that's essentially over £28k we could afford to lose on selling our house (or for house prices to rise by in our absence) for us to be no worse off than letting the house out and returning, halving our mortgage term and struggling to pay the extra £500 pcm mortgage because we've gone from paying it off over 35 yrs to 13 years! Hope that makes sense - it's rather convoluted but the logic is there...somewhere! ;-) I-F :-) Link to comment Share on other sites More sharing options...
Gbye grey sky Posted February 4, 2014 Share Posted February 4, 2014 When I was a kid our neighbours sold up and emigrated to Aus. They were back about a year later... The problem was, in addition to spending some of their cash while they were in AUS, UK house prices and GPBAUD FX rates had moved; so while they sold a fairly nice house when they left the UK, they moved back into a flat in a horrible (and I do mean, horrible!) area where they lived until they died. I guess the moral is always cover your a$$. Yeah but you cannot plan for every possible contingency. Moving back in a year and on the wrong end of currency fluctuations was unlucky or they were unwise to move back when they did. As with everything weigh up the pros and cons, balance of probabilities and make a decision based on that. My own thoughts backed up by many with first-hand experience posted on this thread is that it is probably best to sell in most cases (and certainly for me). Link to comment Share on other sites More sharing options...
ItchyFeet76 Posted February 4, 2014 Share Posted February 4, 2014 Yeah but you cannot plan for every possible contingency. Moving back in a year and on the wrong end of currency fluctuations was unlucky or they were unwise to move back when they did. As with everything weigh up the pros and cons, balance of probabilities and make a decision based on that. My own thoughts backed up by many with first-hand experience posted on this thread is that it is probably best to sell in most cases (and certainly for me). We intend to give it at least a year, and if we hate it after that time we still wouldn't jump on the next plane back - we'd weigh up the financial pros and cons of each country - i.e. don't sell in Aus if prices have crashed and UK is still rising! Obviously, if circumstances dictate that one has to leave (loss of job, etc.) then that's bad luck and you have to suck it up I guess. Praying this won't be us though :notworthy: Link to comment Share on other sites More sharing options...
Flappers263 Posted February 4, 2014 Share Posted February 4, 2014 We are going to rent to start so it's a 'safety net' bolt hole in the event things don't go to plan, the OH doesn't want to commit "forever" so we are keeping it on for eventualities.... We've have one rental valuation via foxtons but they want to charge 17% management fees for the place....seems very high to me but maybe not?? Link to comment Share on other sites More sharing options...
Londongal76 Posted February 4, 2014 Share Posted February 4, 2014 I own my house 50/50 with a friend. I don't see the point in selling my half off when I go, he wants us to keep it too, as the rent will cover the mortgage and then some. Plus it'll be an income in years to come when it's paid off. Maybe it's because it's in London, and personally I think i'd be foolish to let go of property in London, even if I don't ever want to come live in it again (assuming I make it South!). Link to comment Share on other sites More sharing options...
northshorepom Posted February 4, 2014 Share Posted February 4, 2014 I own my house 50/50 with a friend. I don't see the point in selling my half off when I go, he wants us to keep it too, as the rent will cover the mortgage and then some. Plus it'll be an income in years to come when it's paid off. Maybe it's because it's in London, and personally I think i'd be foolish to let go of property in London, even if I don't ever want to come live in it again (assuming I make it South!). Totally agree. It's about as one-way as any property bet can be, provided you're already on the London property ladder, don't jump off unless you have to Link to comment Share on other sites More sharing options...
Gidza Posted February 4, 2014 Share Posted February 4, 2014 I would say you need to work out the risks involved. If your tenants decide to move and your property is unoccupioed for a couple of months then you have to pay the mortgage from Aus. and if you e rentals do not cover the mortgage you have to top up from the other side. So depends at what stage your mortgage is. Also if you have doubts about whether Aussie is for you then hold on to the property but if you are dead sure you are not returning then consider all the hassle of managing a property from Aussie and if it wont stress you. Things like boilers breaking down and you have to quickly pay a plumber to fix so you will need a very reliable and committed person on the ground here to run around for you. Link to comment Share on other sites More sharing options...
ItchyFeet76 Posted February 4, 2014 Share Posted February 4, 2014 We've have one rental valuation via foxtons but they want to charge 17% management fees for the place....seems very high to me but maybe not?? Ouch! We had a local estate agent quote 10% + VAT (which is about as low as you're going to get around here) but that was for a 'normal' rental. Northwood do a 'guaranteed rental income' scheme which means that you get your rental every month, regardless of whether or not there are tenants, and there are no extra fees like inventory fees each timie you get a new tenant, admin. fees, etc. The downside is that, on our valued £950 pcm rental (which the tenant pays), we would only get £650. Sounds like a huge gap but when you work out what we'd pay an estate agent for a 'normal' rental agreement, it's only about £80 less! Crazy eh. Link to comment Share on other sites More sharing options...
ItchyFeet76 Posted February 4, 2014 Share Posted February 4, 2014 ...personally I think i'd be foolish to let go of property in London, even if I don't ever want to come live in it again (assuming I make it South!). I totally agree. If our house had been in London then I think we'd be pulling every trick out of the hat to be able to afford to keep it! :biggrin: Link to comment Share on other sites More sharing options...
PeterJa Posted February 4, 2014 Share Posted February 4, 2014 Moving back in a year and on the wrong end of currency fluctuations was unlucky or they were unwise to move back when they did. I wouldn't say anyone could be unwise about when they choose to move. Show me the person who can predict both (or either) FX rates and property prices and I'll show you the richest person on earth. It's best to work out where you're exposed, or what your "worst case" situation is, and protect yourself against it. Link to comment Share on other sites More sharing options...
Gbye grey sky Posted February 4, 2014 Share Posted February 4, 2014 I wouldn't say anyone could be unwise about when they choose to move. Show me the person who can predict both (or either) FX rates and property prices and I'll show you the richest person on earth. It's best to work out where you're exposed, or what your "worst case" situation is, and protect yourself against it. If you choose to move (or return) then unless you are the victim of circumstance ie. unlucky, then surely you choose the timing of that move or return. If you make this choice at a disadvantageous time as far as currency/property valuations are concerned then that would be an unwise choice would it not? Agree up to a point with working out where you are exposed but there is always going to be an element of risk or doubt in any decision. If you always worked out the "worst case" situation you would probably never even cross a road or get in a car, let alone emigrate. Link to comment Share on other sites More sharing options...
wolvesaussie Posted February 4, 2014 Share Posted February 4, 2014 I have a great little deal with mine, its only 6months in so early days but my girlfriends parents look after the house (while I do a lot of email work, chasing rent etc advertising etc), they just go over when something needs fixing etc. He is a handyman for a job so the perfect person. In return I have paid for them to come out to visit this year and will continue to do so every year we keep the arrangement... Im happy get to keep the house, Girlfriend is happy she gets to see her family which normally she would not (as they couldnt afford). So basically instead of paying the estate agent a management fee, the money stays in the family in form of flights so they can visit their daughter. Link to comment Share on other sites More sharing options...
ItchyFeet76 Posted February 5, 2014 Share Posted February 5, 2014 Fantastic idea, Wolvesaussie! I wish we were lucky enough to be in that situation but, unfortunately, even if it was financially viable, my parents live too far away to be of any use, my inlaws are close-by but not of any use full-stop, my sister is too busy with work and we don't have any close friends or neighbours able to step in and help out (the neighbours are lovely but we've only known them a year). It must be lovely to know that you're going to see family every year. Do your parents visit, too? My parents will never, ever visit as my dad hates the thought of long-haul flights, lack of legroom (he's over 6"), hanging around in airports for hours, security checks, flight delays, jetlag, etc. My mother is more open to the idea but would never fly out without him. :ssign3:The longest they've ever flown was to Majorca! They will pay for us to fly back once in a while though, but the thought of making the trip more than once with 3 kids fills me with utter dread and horror, lol. :shocked: Sorry to hijack the thread - as you were! :notworthy: Link to comment Share on other sites More sharing options...
PeterJa Posted February 5, 2014 Share Posted February 5, 2014 If you choose to move (or return) then unless you are the victim of circumstance ie. unlucky, then surely you choose the timing of that move or return. If you make this choice at a disadvantageous time as far as currency/property valuations are concerned then that would be an unwise choice would it not? No, not at all. Think about it. Imagine someone moved to Aus six months ago when the FX rate was 1.45. If they had sold their house in the UK for £100,000 and changed it to $ they'd have $145,000 Now, if they moved back today with the FX rate at 1.83, that $145,000 would be worth £79,235. So, are they unwise or wise to change their dollars back to pounds now? No one in the world knows the answer to this. Any answer is just a guess. If the exchange rate goes back down to 1.5 then yes, it would be *advantageous* in hindsight to keep their money in $ for a while as they can change it back to £96,667. BUT, what if they hold dollars and then it goes to 2.2, which is a very, very feasible situation? Their original £100,000 is now only worth £65,909!!! And then what do they do? Take the loss or wait some more? Add to this the property market. If the property market changes at the same time (uk homes get more expensive, the place they bought in Aus goes down) you now have a double whammy of badness and you could come back with hardly anything. On the flip side, if the Aussie dollar gets stronger, the Aussie property goes up, and UK property goes down you'd come back and buy your old home twice. Unless you're a politician and judge everyone with 20/20 hindsight you cannot say "wise" or "unwise" in this situation as no one knows which way property or exchange rates are going to go. I've been doing this for years and the only certainty is they can ALWAYS go further up and until they go to zero they can ALWAYS go further down. Link to comment Share on other sites More sharing options...
ItchyFeet76 Posted February 11, 2014 Share Posted February 11, 2014 Hi there GbyeGreySky, yes apparently it is possible to get a home loan. I've enquired from HSBC and Commonwealth Bank. Here's a link from the latter:- https://www.commbank.com.au/personal/international/managing-your-finances/loans.html Ideally, we would gain PR and then buy a house but if not then it's good to know we can still get a home loan :-) I emailed FIRB to enquire what hoops one might have to jump through (if on a 457) to buy an Aussie property, and I got a reply back today with a link to a pdf document which some might find useful. It seems you do need permission to buy a house (new or existing) but, unfortunately, it doesn't say exactly what you need to provide to guarantee approval is granted:- "Established (Second-Hand) Dwellings Temporary residents need to apply if they wish to buy an established dwelling. Temporary residents may acquire one established dwelling only and it must be used as their residence (home) in Australia. Such proposals normally meet with no foreign investment objections subject to conditions (such as, that the temporary resident sells the property when it ceases to be their residence). Temporary residents are not permitted to buy established dwellings as investment properties. New Dwellings A ‘new dwelling’ is a dwelling which is being purchased directly from the developer and has not been previously occupied for more than 12 months in total. Temporary residents need to apply to buy new dwellings in Australia. Such proposals are normally approved without conditions." Here's the link incase anyone is interested:- http://www.firb.gov.au/content/guidance/downloads/gn2_jan2012.pdf Cheers, I-F :-) Link to comment Share on other sites More sharing options...
fourcorners Posted February 12, 2014 Share Posted February 12, 2014 We came out on a 457 2.5 years ago and rented out our house in the UK. With our increased earnings in Australia, low interest rate and very good exchange rate (AU$ to GBP) we have reduced our mortgage from £150k to £40k, and by April we will have enough in the bank to pay the mortgage off completely. Admittedly we have had very favorable conditions but in a very short time we will be completely debt free. If we had sold the house to come to Oz and paying much higher interest rates/house purchase price, we would still be owing a lot of money here. Last year we also inherited 75% of another property and paid cash to purchase the rest. So we now have a monthly profit in the UK of around £1000 after agents fees, mortgage payments, insurances, maintenance etc. One property agents fees are 10%, the other charges 8%. We haven't had any major issues so far and haven't heard a peep/complaint for 12 months now. Our lenders (C&G) haven't increased the interest at all and have been great to deal with too. But..... we have worked very hard to send back money every month since we arrived in order to pay down the mortgage. We could have rented something nicer in Australia, gone on more holidays, purchased more stuff (cr*p!) and the like, but we made the choice to sacrifice that for longer term financial stability. And it's worked. We're now looking to return to the UK and it's just a matter of where jobs will be that will determine what we do with the properties. I imagine we will end up living in one for a year or so and making renovations, as its a 100 ish year old cottage and we could add a fair wack of value to it. The question is now do we pay off the mortgage 100% or do we leave a small sum in there hoping we can re-mortgage at the same rate (2.5%). Circumstances are very different though, our move to Australia wasn't about starting a new life and never returning, it was about having an adventure and gaining more experience in our careers. Hence we didn't burn any bridges. Link to comment Share on other sites More sharing options...
jimmyay1 Posted February 12, 2014 Share Posted February 12, 2014 We kept our property on in London after moving down here 15 months ago. The tenant has been fine, and we have an agent also looking after it, though the tenant knows they can get in touch if they need anything. It's a state of mind being worried about tenant issues really. The bigger worry is when in years time you need to spend money on the property , will it be easy to do it with exchange rates etc. Also , might you move back ? In a way its good to keep your hand in the market in the uk if you still have substantial ties there or you are also at the mercy of echange rates. However, its a matter of choice really. Also in the longer term with you being an overseas resident there may be tax implications to worry about. We saved a deposit and have been lucky enough to be able to buy in Melbourne without selling up in London . However would not rule out selling up in the UK in future, it just depends. The longer i am here, the less i can imagine going to live back in the UK (and much as i love London,probably not back there to live - think ive done that now), lots of factors to consider. Link to comment Share on other sites More sharing options...
northshorepom Posted February 12, 2014 Share Posted February 12, 2014 I think being in the London market makes a difference - it operates on different principles to the rest of the UK and really is pretty much a one-way bet. Have London house prices ever really dropped? They just seem to keep climbing Link to comment Share on other sites More sharing options...
Londongal76 Posted February 12, 2014 Share Posted February 12, 2014 I think being in the London market makes a difference - it operates on different principles to the rest of the UK and really is pretty much a one-way bet. Have London house prices ever really dropped? They just seem to keep climbing Not since i've been there. Crazy really. Though, demand constantly outstrips supply in London so unless there's a massive global downturn, it's unlikely. Prices in London tend to plateau instead of dropping and just stagnate for a while, then climb again. Link to comment Share on other sites More sharing options...
wolvesaussie Posted February 13, 2014 Share Posted February 13, 2014 Fantastic idea, Wolvesaussie! I wish we were lucky enough to be in that situation but, unfortunately, even if it was financially viable, my parents live too far away to be of any use, my inlaws are close-by but not of any use full-stop, my sister is too busy with work and we don't have any close friends or neighbours able to step in and help out (the neighbours are lovely but we've only known them a year). It must be lovely to know that you're going to see family every year. Do your parents visit, too? My parents will never, ever visit as my dad hates the thought of long-haul flights, lack of legroom (he's over 6"), hanging around in airports for hours, security checks, flight delays, jetlag, etc. My mother is more open to the idea but would never fly out without him. :ssign3:The longest they've ever flown was to Majorca! They will pay for us to fly back once in a while though, but the thought of making the trip more than once with 3 kids fills me with utter dread and horror, lol. :shocked: Sorry to hijack the thread - as you were! :notworthy: My parents live in Melbourne, they moved out when I was a baby and I returned to the UK for a "holiday" when I finished uni and stayed 10 years . Im over 6 foot, flying is a pain but Emerates at least last time I flew still give the emergency exit row to the first people to ask for it at check in so I always get that. Link to comment Share on other sites More sharing options...
Popps77 Posted February 16, 2014 Share Posted February 16, 2014 Hi Millers, Do you find that you make much profit on renting your house in the Uk? we are currently on a residential mortgage and its due for renewal in March, we think we should be honest in telling them we are moving to Oz in July for 2-3years (on a 189) not sure of longer term plans but with a higher 'buy to let' and paying tax how does it work out for you? Link to comment Share on other sites More sharing options...
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