Emigrating..can I rent house with mortgage?

sad_gills_fan

Forgive me if this has been covered but I did a search and couldn't come up with much ...

My partner and I are looking at moving to Australia for a year (not for a few years yet). We have a mortgage on our house but would like to be able to rent it (perhaps to friends) while we're away.

Before going, we would ensure we had enough money to pay the mortgage for that year just in case the 'tenants' left but would we be allowed?

I'm getting mixed answers when asking friends/colleagues ... some say I have to change my mortgage, some say I just can't do it and some say it's all about the insurance.

We don't really want the house to stand empty for a year and we definitely don't want to get into trouble with the mortgage company. Incidentally, we will be changing mortgage companies this year hence why I haven't just called my current company and asked them.

Thanks for any help you can give ... best advice gets a free break to Australia (not inc flights!!) ha.

Sad Gills Fan

zipwen1

you would have to get consent to let from your mortgage company. and you would have to change your insurance which usually costs more if you are renting your house out.

rjm2k1

Depends on your mortgage company, some will let you do it on your current mortgage, some will insist on a fee, some will insist you move to a letting mortgage, you will only find out by asking them. If you are on a fixed rate mortgage, switching could mean you pay redemption fees too.

You do need to look at your insurance too, though the insurance and mortgage aren't linked so if you were letting to friends and only for a year, some people would keep quiet about it mortgage wise as long as you sort the insurance and the mortgage co are getting their money they won't be chasing to find out. Don't cut corners contract wise etc, because you are renting to friends, enemies can soon be made out of this kind of arrangement and you could see a side of your friends that you didn't know existed so better to cover your back just in case.

rosysparkle

If you are getting rental incime while you are out of the country you need to apply to HMRC on form NRL1 for a CNR number, otherwise your tenant or letting agent is obliged to deduct UK income tax at 22% from the rent and forward this to the Revenue.

Once you have a CNR number you will get your rent without at-source deduction of tax, but you do still need to fill in a tax return at the appropriate time.

Get consent to let from your mortgage provider and ensure your insurance covers let property.

Make sure you are aware of your obligations as a landlord (gas cert etc). I would advise you to have a proper AST drawn up even if you are planning to let to your best friend.

sad_gills_fan

Thank you so much to everybody. It's very useful info.
I'm tempted to just let friends move in, pay a smaller rent than the local average but ensure I've got some contract with them.

On the other hand, I know that if I do that, something will go wrong, the house will burn down, they'll sue me and I'll end up in brisbane without a hope in hell of sorting it out!!

Think I'll do it officially, then I can charge more in rent too to cover the cost!!

Sad Gills Fan
*looking for gullible tenants in Kent area*!

rjm2k1

If you aren't going to be around you really need to use an agent to manage the property, which reduces the amount you will get out of it.

nifferwilko

Personally I don't think there would be a problem with the mortgage company giving you permission to let it out (ignoring the fees they may want to charge/increased interest rate) as it is protecting their interest in the property if it is occupied while you are away for a year, instead of sitting empty.
It may be a case that your mortgage will change to a BTL mortgage for that year so you'll probably pay more interest. I know my mortgage company (as I looked at this intentially) want you to tell them (no mention of permission) and will increase the interest rate by 1%.

rjm2k1

If you were to decide to leave it empty rather than let it out, you would still need to look into the insurance side of things as some insurers wont cover empty properties.