Letting out my property whilst living abroad

looknohands

How easy is it to let my property out when I move abroad? And does anyone have any experience doing this?

I know I have to tell my Mortgage provider, do I need to switch mortgage product to do so?
I am only moving abroad for 1 year so would it be easy to switch back to a residential mortgage when return? My current term finishes when we'll be moving.

Do I need to have more equity (75%)? in the property to switch to BTL?
Or does that only apply for new purchases, not a product switch. I only currently have 85% LTV.

One thing that might be an issue is the mortgage is £650 a month, the average rent around here is about £650 to so I don't think the rental payments will cover much of the mortgage when taking into account insurance, repairs, management fees etc it wont cover much of the mortgage.
Would this matter to a mortgage provider?

I'm weighing up whether it's easier to sell or rent. As I'm only moving for one year I would prefer to keep it, buying it was a pain and the house would probably only sell for the price we bought it in the current climate, so we'd be losing out with all the fees we paid.

Also I'm self-employed so buying a house needed 2 years records.. With working abroad and then returning I assume the same will happen and when I come back and I'll need to work another 2 years self employed for me to be eligible for most mortgages again?

teddysmum

I'm sure others will explain the difficulties with the financial side of your plan, but what will you do if you return to the UK and find that the tenant refuses to move out ?


Will you have somewhere to live ? According to tv programmes, where this has happened it can take months or longer to get your property back. Also, councils/advice centres suggest that tenants refuse to move if they want to be offered other accommodation, causing a nightmare for the landlord, as he has to take legal action.

BlaEm

Depending on your lender you may be able to get a consent to let, especially if the move is only short term. You'll likely have to pay an admin fee for this.

This would mean you wouldn't have to switch products - however, I'm not sure on whether there would be LTV or rent cover requirements.

Additionally there are all sorts of legal requirements with becoming a landlord - even a temporary one - which you must consider (there are many stickys on this topic). You'll also have to pay tax on the income - and capital mortgage repayments aren't deductible.

If the rent would barely cover the mortgage, let alone agency fees / void periods etc, you should be prepared to save a sufficient buffer to cover the mortgage or monthly shortfall. Also bear in mind that your tenants may not leave when you want them to, so have a contingency plan for what to do on your return.

Baby_Angel

This is something we intend to do next year. We would eventually move abroad permanently, but we are not selling it as we want to be sure we won't come back. Our house is in London and we have about 45% equity.
We are with Nationwide and they said we have to pay 1% more in interest after 6 months of letting it. Not sure for how long, but I am assuming it is for 2 years (because my brother told me this) or until the fixed term comes to an end.

I will reading this thread with interest.

theartfullodger

teddysmum wrote: »

I'm sure others will explain the difficulties with the financial side of your plan, but what will you do if you return to the UK and find that the tenant refuses to move out ?


Will you have somewhere to live ? According to tv programmes, where this has happened it can take months or longer to get your property back. Also, councils/advice centres suggest that tenants refuse to move if they want to be offered other accommodation, causing a nightmare for the landlord, as he has to take legal action.

Indeed: And the most recent statistics from the Ministry of Justice shows theaverage time from claim being issued to repossession by county court bailiff is 41.0 weeks - see
http://www.landlordzone.co.uk/forums/showthread.php?75530-Time-to-repossess-statistics

- so be very sure you'd have somewhere else to live if, for whatever reason, you wished to move back in..

agrinnall

I think your inability to ensure repayments are covered by rent may mean that your lender will refuse to grant CTL.

looknohands

Interesting that's an eye opener! are tenants paying rent in that time? Or is that 41 weeks of non-rent payment too, that would obviously cause a problem. Possibly this is a little harder than I thought then...

My other option is leaving it vacant, but maybe I've missed something in my sums here...

Selling currently would leave us around £4 - 7k fees, no increase on the value of the house.
When we come back we will want to buy a house, we'd be paying around £4.5k in fees to buy a house similar to this current one, and I'm assuming house prices remain the same and we don't need more deposit.

If we don't sell, costs are...
£7.8k for a years mortgage
£1k council tax
1 year unoccupied insurance £500.

So actually leaving it vacant means we would be better off than selling, we'd have our house back straight away and we could even come back and stay as can leave some furniture here.

I had assumed letting it would be a much better option than leaving it vacant.

Edit: Do I have to inform mortgage company it's vacant?

booksurr

no one on here can say what YOUR lender's attitude will be. Go ask them, they may as suggested offer you consent to let rather than forcing you to convert to a BTL mortgage. If they did the latter then yes the norm is 25% equity and at least 125% rent cover so you may be in trouble finding a BTL mortgage at reasonable rates

as for being a LL when resident overseas....

1. You must have a UK address at which your tenant can contact you. No address and legally the tenant does not have to pay any rent. the address can be that of a letting agent, your parents, or anyone else you know and trust would pass on messages.

2. as a self employed you must be used to doing tax returns already? You will need to register under the Non Resident Landlord scheme or else your tenant is legally required to deduct 20% tax from the rent they pay you and pay it over to HMRC. Much simpler just to register... https://www.gov.uk/tax-uk-income-live-abroad/rent

3. read all 7 of GM's guides (and every link in each one) for the rest of what you need to know. Being a LL is more than just collecting rent

https://forums.moneysavingexpert.com/discussion/5180214

G_M

It's very common, but there are pitfalls. If you have family who are willing to act as your agents, that's ideal. The biggest pitfall is otherwise your reliance on a letting agent. Some are good, some not. And all are profit-driven, such that your best interests are secondary.

Tax is an issue, and you must give your tenants an address in Eng/Wales where they can write to you.

Now read:

Tenancies in Eng/Wales: Guides for landlords and tenants This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

Topics covered:

* Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new protection (2015)

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

booksurr

looknohands wrote: »

1 year unoccupied insurance £500.

is that a guess or a quote?

seems lunatic low to me for a whole year

getmore4less

Someone on here(will need a search I forget who) just gets lodgers in to their house and keep a room for there own use when in the UK.

They spend a lot of time away.

Might mean less money and many say you can't do that.

Not an option if there are not multiple rooms.