Cyprus posting - House Let
If_I_were_a_rich_man
Forumite 7 Posts
Hello,
I have had to repeat my post from a different thread as MSE will not allow me to link to it.
'I am due to move to Cyprus for 3 years with my work:beer: and would like to retain my home for a number of reasons. I have spoken to my mortgage company and for a small fee they are happy to allow me to rent on my current deal.
I have spent the last 5 hours looking at leting agents, insurance policies, Tax guidance and also alot of the threads on here. Due to the distance from my home and my work schedule I will more than likely go for a fully managed let with an agency. What I would like advice on is what I should expect from them and what I would need to organise on top of their service.'
Thank you for your time.
I have had to repeat my post from a different thread as MSE will not allow me to link to it.
'I am due to move to Cyprus for 3 years with my work:beer: and would like to retain my home for a number of reasons. I have spoken to my mortgage company and for a small fee they are happy to allow me to rent on my current deal.
I have spent the last 5 hours looking at leting agents, insurance policies, Tax guidance and also alot of the threads on here. Due to the distance from my home and my work schedule I will more than likely go for a fully managed let with an agency. What I would like advice on is what I should expect from them and what I would need to organise on top of their service.'
Thank you for your time.
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You will need to let the Inland Revenue know that you will be a Non-Resident Landlord for Tax Purposes. Will still catch you with annual tax returns etc.
Letting Agent - Check what % they want to charge you.
Be sure to have Annual Gas Safety Inspections. Might be easier with something like British Gas Homecare for Landlords where the Annual Inspection is included. Recently had a Fan fault on our boiler, cost nearly £400 to fix. Could have 12months Homecare for that. All tax deductable too...
Alias
Thank you for your reply. please see my responses in blue.
A "Consent to Let" should be free of charge from the mortgage company, might have to mention your in the armed forces.
I mentioned it and it will cost £295 for the consent, after speaking to them I even found it in the T&Cs.
You will need to let the Inland Revenue know that you will be a Non-Resident Landlord for Tax Purposes. Will still catch you with annual tax returns etc.
I need to speak with a tax advisor to see if it is better to be taxed at source or left upto me to do a SA Return.
Letting Agent - Check what % they want to charge you.
Of the two who have replied, one is 8% plus VAT and the other is 10% plus VAT.
Be sure to have Annual Gas Safety Inspections. Might be easier with something like British Gas Homecare for Landlords where the Annual Inspection is included. Recently had a Fan fault on our boiler, cost nearly £400 to fix. Could have 12months Homecare for that. All tax deductable too...
Please excuse my ignorance, but what does the full management fee actually pay for? Would I be right in assuming that the in house maintanance will be charged on top of the fee?
Alias
Thank you for your reply. The full management offered by one company is:
[FONT="]Full property marketing[/FONT]
[FONT="]Credit checks and referencing on applicants[/FONT]
[FONT="]Free rent guarantee insurance[/FONT]
[FONT="]Free EPC if required[/FONT]
[FONT="]Periodic property inspections[/FONT]
[FONT="]Call out available seven days a week[/FONT]
[FONT="]No administration or set up fees[/FONT]
[FONT="]Full property inventory[/FONT]
[FONT="]We deal with tenancy agreements[/FONT]
[FONT="]Inspections and reports on all breakdown and repair issues[/FONT]
[FONT="]No renewal fees[/FONT]
The other is almost the same but without the in house maint team.
[FONT="][/FONT]
1. Consent to let was granted free to me by HSBC because Mr Gonzo is Forces
2. I used NorthwoodUK for Lettings - Fully Managed Guaranteed Income.
Whilst they were very good at Letting it they were not so good with local contractors, and I tended to use my knowledge on local tradesman than trust them.
Check the contract with regards to if you wish to sell the property. Mine tied me in with Northwood, and they were not very good at sales, so I ended up having to cancel the contract, lose the tenants, and market it for sale vacant.
2. Insurance - I found CIA fabulous. The insurance was through Towergate Wilson. Very reasonable costs, and when I had a claim (not due to tenant - some scrote damaged garage door) they were very quick and very good.
3. Speak to the I.R. I doubt very much they will deduct the extra tax at source, you will probably have no choice but to complete a Self Assessment Tax Return at the end of each financial year. They are not difficult after you get over the initial pain of the first. I do mine online every year as soon as I get it (as long as I have all the info) and it takes me 20 minutes tops. Also something else to bear in mind, if you decide to sell after letting it you may be subject to Capital Gains Tax dependent on how long you let it for, although there is currently a clause to state otherwise for people having to live in work accomodation I don't know how long that will remain in force.
4. If you have gas in the property ensure you get a Landlord policy with someone like British Gas (approx £16 per month). I actually used a local contractor who does the same sort of policy, never had to use it but it was there if the tenant needed it (and could save costly call outs).
5. Maybe set up a different bank account for the let property so you could differentiate between your own stuff and your let property stuff. Definately made it easier for me over the last few years.
Good luck with your posting to Cyprus.
Thats right. Gas Safety Check can vary from £40-100 depending if you have Boiler/Gas Hob/Gas Fires etc.
Remember, your the Landlord of the Tenant. The Agent just works for you. If it goes wrong, your in trouble. Not the Agent. The tenantcy agreement is between yourself and the tenant.
Insurance - I use "Direct Line for Business" - Landlord Insurance. Some have Rent Insurance policies, but that requires the tenant to pass credit checks etc.
Tax Return? We hire an accountant. They charge £200 per year for the tax return. We also run a excel spreadsheet with Income/Outgoings for the house.
The top-tip with the mortgage, is to remember that you can only claim the "interest" part of the mortgage. So if the mortgage was £300 pcm, the interest is £200 with £100 capital, you could deduct £200 pcm of the rent as allowable deductions.
Some Deductions -
Interest Part of Mortgage
Letting Agent Fee
Agreement Fee's
Inventory Fee's
Repairs
Maintenence
10% Wear & Tear (Thats 10% of total rental income)
Professional Fee's etc
Get in touch with the Inland Revenue to be able to declare yourself as a Non Resident Landlord so you will not pay any tax on your rent/income (you'll still need to pay the VAT to the letting agents), then at the end of the year make sure you complete a self assessment tax return. As Mrs Gonzo said, it's really not that difficult to complete online once you get your head around it - as all your set up fees, gas checks, morgage interest etc are tax deductable your first bill will most likely be very small or even a rebate if you're lucky. If you read into it you may well find that you can also claim for trips back to the UK to visit your property/buisness.
Our letting agents carry out the full management service for 10%, they find the tennents, arrange for the annual gas inspection, and arrange for any repairs that need to be carried out.
Good luck and enjoy your time in Cyprus.
EITHER a) you do not register for the NRL scheme - in that case your letting agent (or the actual tenant if you do not have an LA) is legally required to deduct 20% tax from the rent he receives / pays before it is passed to you. You will still be required to declare the income to HMRC so there really is little point in option a)
OR b) you register with HMRC under the NRL Scheme and provide HMRC with an annual tax SA return and HMRC allows you to receive the rent without tax being deducted. You then do the tax return and pay over the tax at the end of the year, you thus get to use the tax money for most of the year (but don't spend it
as regards fully managed LA services the two main extra services you get are:
- collecting rent (incl. chasing non payment); and
- managing repairs/maintenance
Management of non payment should include the lA dealing with the legal aspects of issuing possession notices and going to court to get an order. BE CAREFUL with this as there are no qualification required to be an LA and this fourm is peppered with examples of LA who have no idea what they are doing - get it wrong and a non paying tenant could quite legally remain in the property for many months before you get them out.
For repirs I assume you realise that fully managed never includes the costs of repairs themselves. You always have to pay for them on top of your LA fee
The maintenance service you are paying for as part of your LA fee can cover a range of services and you need to be sure what they are actually offering and so whether it is worth it to you. The key thing here is do you want to approve each job first which could mean you will be contacted at all sorts of times of the day to deal with queries or do you want the lA filtering work out so reducing the need for you to be contacted each time. Some examples of such services are:
firstly - who pays the workmen....
a) you provide the LA with a pot of money and an authorised limit so they can commission and pay for repairs quickly without having to get permission for low value jobs from you in advance every time. The LA tops up the pot when needed by taking money from incoming rent so sometimes your monthly income may vary. This option is good for the tenant as it speeds things up but you may feel you have lost control of your spend (up to the limit of your pot obviously) and your cashflow can vary
b) variation on a) in that you do not provide a pot of money up front but agree in advance they can spend up to £x on each repair and deduct the cost from incoming rent without the need to get permission from you first. Bigger jobs over £x still need your permission. Clelary your cashflow can vary significnatly if there are a lot of jobs one month
c) the LA uses their own workmen and bills you for each completed job afterwards. You get the rent in full but have to separately pay for the repair bill.
Now turning to who does the work...
a) LA's own workmen? This could be very expensive for you since you do not control how much the job will cost as you have no choice about who does the work so can't pick the cheapest quote. You also do not build up a network of trusted workmen since they do not see you as their customer so won't "help" you in the way someone you appointed directly may do. The LA likes this situation because they charge you for managing the workmen and probably also get some commission from the workmen for using them on the job that you are going to be billed for
b) Your own workmen? Key to success of this is do you actually have your own network of workmen and how will they contact you since the LA may expect to be paid for acting as a coms relay. You could use the LA as a post office to receive message from the tenant and pass it on to you but if LA won't do this the tenant is not required to contact you abroad which is why you have to provide a UK address. If that address is not the LA then whose is it and how does that person contact you so you can arrange the repairs yourself using your own workmen. Clearly such coms relays can lead to slow response times so tenants can be unhappy but you keep control of all costs.
Thank you again for your advice, and please keep it coming :-)