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boogaloo

Pros & Cons of renting UK home?

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Hi guys

 

We have had our visa for 15 months now (validated last year) and are really keen to get to Perth before the end of this year but our house has been on the market now for over 6 months and not a single viewing!

 

Everyone telling us not to waste time and to just rent out our house and go now!

 

Obviously the pros to doing that are that we get to follow our dream and get to Perth sooner but what are the cons?

 

We will need to clear debts and raise some funds to set up in Perth but are we likely to get a re-mortgage if giving up jobs and leaving the UK? Also how easy is it to get tenants? Would we be stung for capital gains tax when we eventually sell house

 

We really don't know what to do - any advice greatly appreciated - we are not getting any younger!!

 

Sue:arghh:


:jiggy:Sue, Neil, Holly & Sam

176 visa granted April 2009 & validated October 2009

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Guest SteEyns

We're in a similar position, waiting to have visa confirmed, have a flat that we would prefer to rent, but we're uncertain how much of a hassle it would be, or if we'd be better off selling.

 

I think on a certain value of property you would have to pay capital gains tax regardless of if you sell before or after you go? Here's the government website if it's of any help : HM Revenue & Customs: How to calculate capital gains and losses on property

 

I suppose with renting it's whether using a letting agent (and taking the hit for their fee) less total rent, will cover the mortgage costs..

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Iam came to oz a year ago and rented my flat in glasgow. Its lots of hassle to get all the proper documentation, eg - gas cert, energy report, elec safety, changing over the mortage to leting mortgage with bank, getting registered with landlord scotland and letting tax office know.

 

I got a deal with agent to do a full letting package where they take care of everything and got a british gas homecare deal. I got a tenent with in a few weeks and everything went well.

 

After the tenents six month deal came to an end I have found it really hard to get another tenent in. Its been costing me a fortune for the last few months paying for accomadation in oz and paying my uk mortgage inc council tax and the rest of the stuff.

 

Basically if u get your property let then all is good and you dont have any problems, once its empty its major grief you dont need when setting up a new life.

 

basically

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Guest Count Zero
Hi guys

 

We have had our visa for 15 months now (validated last year) and are really keen to get to Perth before the end of this year but our house has been on the market now for over 6 months and not a single viewing!

 

Everyone telling us not to waste time and to just rent out our house and go now!

 

Obviously the pros to doing that are that we get to follow our dream and get to Perth sooner but what are the cons?

 

We will need to clear debts and raise some funds to set up in Perth but are we likely to get a re-mortgage if giving up jobs and leaving the UK? Also how easy is it to get tenants? Would we be stung for capital gains tax when we eventually sell house

 

We really don't know what to do - any advice greatly appreciated - we are not getting any younger!!

 

Sue:arghh:

I think if I were you I would drop the price to sell ASAP. I've just read an article in the Telegraph saying that many property experts are expecting some further drops in property prices.

I got stung renting my place out a few years ago. Tennents wrecked the place.

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We're in a similar position, waiting to have visa confirmed, have a flat that we would prefer to rent, but we're uncertain how much of a hassle it would be, or if we'd be better off selling.

 

I think on a certain value of property you would have to pay capital gains tax regardless of if you sell before or after you go? Here's the government website if it's of any help : HM Revenue & Customs: How to calculate capital gains and losses on property

 

I suppose with renting it's whether using a letting agent (and taking the hit for their fee) less total rent, will cover the mortgage costs..

 

 

If the property youre selling has been your main living residence then you wont have to pay any capital gains tax when you sell. If its a property you own and have been renting out you will have to pay CGT when you sell.

We are having the same dilemmas as boogaloo. Do we rent for several years, hopefully covering all costs (mortgage, insurances, agents fees, ongoing maintenance problems and expenses, times of being empty) and hope house prices rise ,but then lose out with CGT, and, as has been mentioned, cost of re-furbing the house if we then decided to sell..........All from the other side of the world !!!!!!!!!!!!!!!!!!!!!!!!!!!!. We would also perhaps be renting in OZ which to me seems to cancel out any gain keeping the house in the UK has.

We're maybe starting to think that if we can get a good amount for the house selling and using this as a deposit for a house in Oz it may be a better option......aslong as we can get a good exchange rate that is............mmmmm..seems which ever way you turn theres problems and costs.

 

Carlos

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My background: we moved to Sydney 10 yrs ago, and rented out our home in case we wanted to go back ( we still have a rental property in Uk ) . It was a pain really having all that investment locked up in the UK, and couldn't afford to buy in Sydney , so we rented for 3 years ( and hated every minute not being able to do home improvements, we felt like we were in no mans land not being able to put roots down! ) before deciding to sell the family house which took forever as it was unfurnished by then and looked dated.

 

My gut feel is get on with your life but its not that simple is it? :biggrin:

 

My observations are ( based on 100's of TV shows on house selling ! ) if you have a house for sale for 6 months without 1 visit, there is definitely something very wrong.

 

You have priced it above what the market is prepared to pay - any house will sell at the right price ;-)

You're selling a renovators delight but with a finished house price tag

Your house is not presented for selling ( its too personalised with family photos and niknaks )

You have the wrong agent or they aren't being honest with you about your house !

 

We had our house for sale for 6 months, we changed agents and sold within a few weeks. (We had picked the wrong agent for our area being out of touch).

 

If you do rent your own home, I believe you can rent it for maybe 2 or 3 years without incurring CGT as its classed as temporary by the Tax office (better check ). We didnt pay CGT when we sold our UK home after renting it while being in Oz.

 

Also if you sell any property in the UK AFTER you have been a non resident for at least 5 years you don't pay any CGT in the UK ( unless/until you return as a UK resident when it does becomes due). And the Australian tax office only calculate gains from the date you move to Australia not from the time you bought it. E.g if you rent your house in UK for 6 years while being in Australia for 6 years and then sell it , your capital gains will be UK = zero , Australia gain = 50 % of the gain in price for only last 6 years ( even if you owned the house for 30 years) . So I wouldn't worry about capital gains in the short term if you want to rent. :biggrin:

 

I would worry that you won't be able to buy anywhere in Perth if you haven't sold your UK property unless you have good jobs lined up in Perth.

 

The other pain in the neck for you is the bad exchange rate from pounds to Aussie dollars. Except the last 2 yrs you would have got 25,000 dollars for every 10,000 pounds you swapped , you will be getting $18,000 for every 10,000 pounds today if you are lucky. Thats almost 40% less but there's nothing you can do about it. :arghh:

 

Whatever you do , make sure you make your decisions (Perth house prices and wages) on the current exchange rate ( about 1 pound = $1.78) and not based on old stories from friends a couple of years ago saying how cheap houses are in Australia while basing their opinion on a great exchange rate using their pounds back then. This works in reverse too , when you look at Australian wages just remember they seem a lot higher to you as the pound is weak .

 

So to summarise:

1. Sell up, take a loss and make a clean break and start your new life in the sun and ignore the exchange rate, and start living again. The Aussie economy is very strong.

 

or

 

2. move to Perth and enjoy the good life but rent for a year or so and get a feel of where you really want to live ( i'd recommend that anyway) . Its so easy when you first move here to get too excited and buy somewhere just because its got a pool without thinking of the practical side of life !

 

Exchange rate may improve but there's no indications so far . You can hope that interest rates in UK go up which will strengthen the pound for you.

 

Selling your house in UK but not bringing cash over for a long time isnt that attractive as you will earn very little interest in UK where as you can earn 6.5% over here ! A bird in the hand etc

 

The exchange rate I think is your biggest gamble but no one can tell you the future !

 

Good luck. Australia is a great place to live.

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We rented our house out using the full management service of a letting agency. From the outset our emails went unanswered but the rent was in our account each month so we didn't worry too much, then in Feb this year the rent stopped, the tenant had lost their job and we've not had a penny since. Legally we have 'residential occupiers' or in other words squatters. We paid £250 to one solicitor who then declined to take on the case and just paid £200 to another to send a letter asking the tenants to pay the arrears. Eviction is going to take another 3 months and we have no idea what state our house will be in.

 

You will sell your house if it's cheap enough, I wish now we'd taken the offer that was £18k below our 'bottom line'

course not everyones experience is as bad as ours!

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Guest gary12
We rented our house out using the full management service of a letting agency. From the outset our emails went unanswered but the rent was in our account each month so we didn't worry too much, then in Feb this year the rent stopped, the tenant had lost their job and we've not had a penny since. Legally we have 'residential occupiers' or in other words squatters. We paid £250 to one solicitor who then declined to take on the case and just paid £200 to another to send a letter asking the tenants to pay the arrears. Eviction is going to take another 3 months and we have no idea what state our house will be in.

 

You will sell your house if it's cheap enough, I wish now we'd taken the offer that was £18k below our 'bottom line'

course not everyones experience is as bad as ours!

 

 

 

Jules what a nightmare, I know it is a nightmare getting them evicted. Poor you.

 

We rent out our house in the UK, we changed to a buy to let interest only mortgage this year and finally are making money on it (although it's kept in the UK for repairs to the house). We put our house up for rent at the end of November (we moved the Jan) and it took until the end of April to get a tennant in. In that time we were paying rent here and a UK mortgage that together exceeded $5k a month which was just crippling. We have also dropped our agent this year, they were nothing short of useless, they only checked the house once and refused to do an end of agreement check as we were no longer using them. we had several run in's with them not passing information onto the tennant then in one instance demanding we replace the entire hot water system at a cost of over £3k, our plumber went in and fixed the problem including parts for less than £300!

 

My husband has just been to the UK and inspected it (he was there on business, we are not loaded!!) I was utterly devestated, they are not keeping the garden maintained and have decorated when they were told they were not too,. They are apart from that keeping the house in good order. I have to console myself with the fact that if I wanted to be pig headed I could keep their bond because of the decoration and garden but is it worth it???

 

so I guess after such a long winded post my advice is only rent out your house if you can afford to pay it with no tennat ( we now have a 6 month payment holiday with the mortgage we have should we need to use it) and only rent if you can totally detach yourself from any emotional ties you have with your home ( it was our childrens first home). I find that very hard and it causes me a great deal of stress, my husband sees it now as a business investment and has no emotion to it what so ever.

 

You also need a good list of repairmen that you trust!

 

regards

Michelle

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Guest Jasp

A word of caution. The letting property ppl we arranged to look after our home, three weeks after we had been in Oz and had agreed on the tenant, decided to close down and handed the management of our lovely house onto a company I purposely did not choose in the first place as they are very poor at looking after properties. They allowed the tenant ot cancel his direct debit (they coouldn't stop him - I appreciate that) but to make up for his taking in a cheque a wekk late every month the rent was due, they charged him a paltry fiver. They did not do an initial inspection of the property so could not know what a high standard it was before the guy moved in. In talking to them one would have thought that the tenant was the customer. We agreed on a figure for the rent and when the management of the company changed hands (without our knowledge or permission) each month we were underpaid (and had to chase the money every time) by £350. It was so frsutrating that the company seemd to have us by the short and curlies and could literally put the fone down on us if we became snappy. In the end i had to inform them politley that i would be popping into their office personally to see them when we came over in March - that seemd to do the trick. We have now been left with a £250 electricity bill which has been placed in the hands of a debt recovery agnecy for electricity that has been 'run up' over a 17 -day period after the guy renaged on his six month contract and left after 4. What a shambles. We sold it in the end, but the guy at the rental company got a shock when he realised we were back in town!!

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Hi there,

We moved to the UK 5 weeks after our visa was granted and there was no way we could have sold the house in that time. We had a few estate agents come to the house to check it out an give us an estimate on what we would receive and tell us how they would manage the place.

One of the estate agents offered us 100% guaranteed rent - BUT they would only give us £500 a month. And when I asked what sort of tenants we could expect (house is in a nice, child friendly, quiet close) he bluntly told me it was none of my business who (or how many) people lived there - I would simply get my rent and that was that!!

Strangely enough I never phoned him back!!

The agent we went with strongly vets tenants - they either hold a 3 month deposit, or insist on a guarantor who owns their own house. (And pay us about £200 more a month than the other agent was offering) We have great tenants (neighbours have kept an eye out for us as well) They have re-signed for a second year - we chose not to put the rent up in year 2 because they have been so good.

Not all tenants are bad, but if you can find an estate agent that checks references properly etc it can work out. I have always had emails replied to promptly and even phone calls returned.

Good luck with whatever you do decide!!

 

Jules

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Guest guest33730

Like with anything there will be those who have good and bad experiences however on the whole there are some things you can do to minimise potential problems.

 

Obviously I would suggest you use an agent and that you check them out first - I would only recommend an agent if they were members of ARLA or NAEA as this means they are part of a professional body who have a strict code of conduct. ARLA work the same was as ABTA does for the travel industry, basically there is an insurance backed system which will cover clients for any outstanding money should something happen to the company (in my opinion a MUST in the current economic climate). You also have a rugged complaints mechanism should anything go wrong.

 

Aside from that - the insurance that is now available for landlords is fantastic, my companies use 'Homelet' insurance and it's very cheap for the piece of minds it brings. We also make all tenants take out insurance which protects the landlords possessions, again it's only a few pounds but it stops all kinds of potential problems.

 

Any other advice I would offer is more to do with being honest with your lender, your agent and the tax man etc - so many issues could be prevented if people just told the truth. We are regularly inspected by all kinds of authorities who legally have the right to the information we hold on landlords - certainly my offices in Scotland are inspected annually by the tax office looking for overseas landlords, the fines are punitive and often distressing for all parties.

 

Daniel

(Owner of 'LET-it' in Paisley & Glasgow and 'The lettings Office' in Grays, Essex)

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