Renting our house in the U.K

[scarlet mia]

Hi

 

We are hoping to move maybe next July and have decided the best thing for us would be to rent our house. I would much rather sell up now but there are quite a few for sale round us at the moment and none of them are selling and we are also tied into our mortgage and would have to pay a hefty fee if we was to come out of the mortgage now. So just wanted some advise we plan to rent out and the money from the rent will go into my u.k account and just pay the mortgage we don,t plan on making any money out of it or if we did it would stay in the account for if our house was empty just to help with the mortgage Has anyone else done this and is it a straight forward as it seems.

 

Would love to hear you

Thanks x

[pintpot]

There are a few things you need to consider:

 

1. If you are on the other side of the world, you will need a letting agent for sure as you won't be there to sort any hassles out. They will take at least 10 and probably 15% if they are offering a full service (like getting things fixed when they break). They will find and vet tenants for you, but you'll need to do research on who the best ones are round your way

 

2. You need to talk to your mortgage lender. Some will insist on moving you on a BtL mortgage (which will attract higher interest), if you're really unlucky you might get hit with the early redemption penalty anyway. Some might let you rent it out for a short period on your current deal, but don't count on it in the current climate. Do NOT be tempted to just forget to tell them, if you do and they find out they are quite within their rights to cancel the whole thing and demand their money back. This is bad enough if you're in the UK and have to remortgage rapidly to do so (and guess what? No one's going to be very generous with a mortgage if you've done this), from the other side of the world it doesn't bear thinking about.

 

3. Insurance. You will have to talk to your insurer as well. When you rent out, as landlord you still have to provide buildings insurance, contents insurance is down to the tenant. Most insurers won't provide buildings insurance if it's going to be empty for long periods. Again the consequences of not telling them aren't worth the risk - if you don't tell them and there is a problem where you try and make a claim and they find out it's been empty or rented out, they won't pay

 

4. Tax. Tax treatment for letting property is actually pretty generous but again you'll have to talk to HMRC as you will have a UK income that will have to be declared.

 

5. Landlord's legal obligations. Any letting agent will tell you this anyway, but you'll have to have an annual boiler service and Gas Safe certificate issued to rent out (criminal offence not to), and probably an electrical safety check as well (although this isn't a criminal offence, yet, I don't think)

 

It's a lot of hassle. But then, so is selling in the current market. No easy options I'm afraid

[paisleylass]

Re. insurance, you may find you need to change insurer anyway as many won't deal with you if you're moving abroad - we are with esure who seemed happy enough to lose our custom! Direct Line will provide landlord insurance to emigrants though, so we're goin with them.

 

Tax-wise, you'll need to complete a form for non-resident landlords NRL1 - otherwise if you are using an agency they'll automatically deduct tax from the rent http://www.hmrc.gov.uk/cnr/nrl1.pdf

[jamesnparry]

when "interviewing" letting agents, get three to compare who does what....say what if tenants don't pay - what do they do - what does it cost - how often do they insect the property - how do they let you know on the inspection the condition ( with phots or video) - how many plumbers are there on their books - christmas and new yr boiler goes, how many can they call upon to resolve your freezing cold tenants.......i would recommend you have a few trade persons who are friends or know - so just in case they can be called to help if agents are struggling....als they act as vry good inspectors when visiting and can let you know a the true facts of tenants and condition.......

Please remember the property you rent is a business, no longer your home, and you have to treat it as a business and safe guard yourself, and the assest, and to cover your costs. A good agent will make this happen.

We intend to go next winter (2012) and will still have our properties rented, and remotely manage the agent to give us feed back as if we were still in the uk

 

PM if you need any more info:cool:

[Ken]

Pintpot has mentioned tax and HMRC, but if you are a permanent resident of Australia you also have to consider your tax liability to the ATO (Australian Tax Office). Permanent Residents (but not those on temporary visas) are taxed on their worldwide income which will include rental property in the UK. That said mortgage interest and other costs (including agents fees) are all allowable expenses just as they are in the UK and the double taxation relief applies meaning you deduct the amount of tax you've paid HMRC before paying the ATO so there will be very little (if anything) for you to pay, but you can be fined for not declaring this income.

 

Don't forget to have the property valued before you go as the value (at the exchange rate when you arrive in Australia) will be your base for calculating the gain you've made when you sell the property - and yes you do have to pay tax to the ATO on that gain.

[paisleylass]

Ken, I didn't know temp residents don't have worldwide income taken into account for tax purposes - that's really helpful thanks :oD