Letting property in UK

[Guest 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.

[Guest Pinhead]

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!

[Guest Aussie girl wanna be]

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

[Guest Pinhead]

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.

[Guest 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

[Guest Pinhead]

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]

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!!!

[Guest pabloke99]

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]

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:daydreaming:

[Guest pabloke99]

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

[KazzE]

We are looking into this option seriously and this is what we have been quoted for a buy to let morgage, it gives us about 60k to take with us, this depends on the valuers valuation of our property which could come back lower than we hope with the market as it is.

 

6.49% fixed for 3 years, £999 added to the loan (lender's fee), free valuation, free legal fees, monthly payment of £710 per month on a mortgage of £130,000.

 

So many things I don't like about the renting out route and it will have to be for a least a couple of years until the market improves, of course there is always a risk that the market does not improve for a long time. And we still have to sell at the end of it:arghh:

 

One options is to wait it out - NOT an option for us

 

or drop the price big time but when I spoke to the agent today he does not think it will bring any more people in to view unless we drop from (we have already come down from £215,000 from last year when we went on the market) £198,000 to £180,000 (which would attract the bargin hunters out there) and we just can't swallow that much of a loss, we would end up with a similar amount of money to take with us to the rent option.

 

It is a huge dilema and it is doing my head right in:wacko:

[the hutchies]

We are looking into this option seriously and this is what we have been quoted for a buy to let morgage, it gives us about 60k to take with us, this depends on the valuers valuation of our property which could come back lower than we hope with the market as it is.

 

6.49% fixed for 3 years, £999 added to the loan (lender's fee), free valuation, free legal fees, monthly payment of £710 per month on a mortgage of £130,000.

 

So many things I don't like about the renting out route and it will have to be for a least a couple of years until the market improves, of course there is always a risk that the market does not improve for a long time. And we still have to sell at the end of it:arghh:

 

One options is to wait it out - NOT an option for us

 

or drop the price big time but when I spoke to the agent today he does not think it will bring any more people in to view unless we drop from (we have already come down from £215,000 from last year when we went on the market) £198,000 to £180,000 (which would attract the bargin hunters out there) and we just can't swallow that much of a loss, we would end up with a similar amount of money to take with us to the rent option.

 

It is a huge dilema and it is doing my head right in:wacko:

I know exactly how you feel, we have only just thought of renting, not looked into it in depth yet, gonna give it a little longer but i really don't want to be here another xmas.( had my tree packed away twice labelled "TO GO TO OZ") LOL

Good luck

lisax

[Guest Pinhead]

Well last week I had 5 EA around to value my house and yesterday chose one to represent me to sell my house. I'm fortunate in that my house is in an area that is greatly in demand and of type in short supply.

All the EA said my house was very well presented would sell in the 8 months timescale I have before I go. In fact they were asking whether I could move out earlier if required, which of course I said yes!

 

Valuations of 3 out of the 5 were between £10K & £25K higher than I was expecting even with £15K 'haggle' room. So at this stage I'm optimistic that I will be able to sell before I leave in February and with more cash than I hoped.

The next problem is the exchange rate!!!

[Guest pabloke99]

Well last week I had 5 EA around to value my house and yesterday chose one to represent me to sell my house. I'm fortunate in that my house is in an area that is greatly in demand and of type in short supply.

All the EA said my house was very well presented would sell in the 8 months timescale I have before I go. In fact they were asking whether I could move out earlier if required, which of course I said yes!

 

Valuations of 3 out of the 5 were between £10K & £25K higher than I was expecting even with £15K 'haggle' room. So at this stage I'm optimistic that I will be able to sell before I leave in February and with more cash than I hoped.

The next problem is the exchange rate!!!

 

Pinhead, as much as I admire your optimism, I would be inclined to adopt a more pragmatic stance. Estate Agents will tell you exactly what you want to hear in order to get your business. In a couple of weeks they'll be telling you that you need to drop the price by 30k.

[Guest Pinhead]

That may be the case but as they are suggesting listing it £40K above the amount (12%) I had originally hoped for so I am still optimistic that even with a price reduction I will still get the original amount I planned for. The EA I am listing with has factored in a £10K 'haggle' amount into the price.

Plus I only have a 2 week notice period with no lock in period so the EA would be pretty stupid to come back to me in a couple of weeks to drop the price.

 

At the end of the day it is only worth how much someone is willing to pay, whatever that maybe.

[Guest pabloke99]

At the end of the day it is only worth how much someone is willing to pay, whatever that may be.

 

Exactly, I wish you luck.

[Guest beermeister]

Hey pinhead, you must have got the same EA that we got.....we were told EXACTLY the same thing.....now, 7 weeks later, only had 2 viewings of which 1 hadn't even got their house up for sale yet. Seriously, EA's read this stuff off a script. They're big on promises but short on delivery. Nothing, and I mean nothing, is moving at the moment in this grid-locked market, so don't get too excited by the bull***t that the EA's will spin you, or you'll end up getting frustrated.....sorry to sound negative about it.

 

Make sure you get everything in writing with the EA and go for the minimum contract you can agree with, preferably not exclusive.

 

Good luck. If you sell quickly, let me know the name of the EA and I'll offer him double his commission to sell mine.