Rent out house and go travelling?

ocalllo

My husband and i really want to take a year or two out and go travel, we are not in negitive equity on our house but we don't have that much paid off the mortgate either!
We are weighing up the options of selling the house and leaving some money here for when we get back as a deposit for a new one OR renting it out while we are gone.
My query is - do we need to tell the bank our plans? Our fixed rate mortgage is up in August 2010. Also would we get a remortgage as we would be leaving our jobs.
Any advise would be appreciated.
thanks

theartfullodger

a) You must tell the lender: They may charge you extra/raise the interest rate..
b) You will need to pay tax and as out-of-country will probably have 22% taken off rent anyway under the HMRC non-resident landlord scheme..
http://www.hmrc.gov.uk/CNR/nr_landlords.htm
c) And you'll need LL insurance (ordinary sort won't be valid), EPC & Gas saftey cert. etc etc. etc.

Cheers!

Lodger

DVardysShadow

theartfullodger wrote: »

a) You must tell the lender: They may charge you extra/raise the interest rate..

In respect of renting, not travelling

b) You will need to pay tax and as out-of-country will probably have 22% taken off rent anyway under the HMRC non-resident landlord scheme..
http://www.hmrc.gov.uk/CNR/nr_landlords.htm

Consider going across 2 tax years, so you are in the country for half of each year.

c) And you'll need LL insurance (ordinary sort won't be valid), EPC & Gas saftey cert. etc etc. etc.

And you need to have a reliable agent. And what would you do if your tenants left and you could not get new ones?

Personally, I would sell in order not to have the worry.

ocalllo

thanks for the replies.
hmmmm seams like alot of hassel - maybe we would be better selling and leaving the money in a bank account for when we return - how would that work??

tax wise i mean...we are not talking millions, but we might make a very small profit on what we bought it for 5 yrs ago. maybe 5K- 10K

bmunky7

Tax-wise no tax due as this is main residence and therefore any profits are completely exempt.

Fire_Fox

You don't need to tell the lender, you need to ask the lender. For some it is merely a formality, others will refuse or increase the mortgage interest rate.

gld73

I'm abroad working for a charity for a couple of years, so was in the same dilemma when I was leaving the UK a year ago. Unfortunately I chose to rent my house out; with hindsight I wish I'd sold it at that time. I used a "reputable" letting agent and paid extra for their full service seeing as I wouldn't be able to deal with repairs and inspections etc. Unfortunately the tenants were pretty useless and couldn't do anything themselves - so despite it being a fairly new house with no problems when I left, plumbers, handymen etc were called out a few times (I even had 60 quid deducted from the rental income one time as I had to pay for an electrician to go out and just flick a tripped circuit breaker switch...:mad:). The tenants didn't cut the grass once in a year either, though the letting agent insisted they inspected every 3 months (inspections which again I had to pay for). There were so many extra charges that in the end I didn't even cover my mortgage payments. I've just sold the house, even though I had to underprice it to sell it quickly as I couldn't afford to have it empty but couldn't face the hassle of renting it out again (I discovered the hard way that letting agents do very very little for their money).

So if you do rent it out, as well as all the legal stuff like the EPC, gas cert, insurance, and getting your lender's permission, I'd recommend only doing it if you're confident you've got a very good and reliable tenant for the duration of your absence!

Bermuda_John

i went abroad 6 years ago, i changed my mortgage to interest only, rented it out and cleared £325 a month in profit.

I managed it myself, I made sure i had a relaible plumber and electrician on hand before i went.

I used them a few times but that is to be expected over 4 years.

Pay interest only you are not paying more to the bank than you need to over this short period of time while you are travelling.

Bermuda_John

wont the personal allowance cover the rent so no tax will be paid? This is after claiming back the mortgage interest as an expense.

Plus there are two people in volved so they get double the personal allowance.

missile

You cannot offset rental income against personal allowance

tbs624

Keep things simple and sell it Occallo.