Letting main home to rent abroad

ent_moot

This is very much a theoretical question:

My wife and I were thinking that, after we've paid the mortgage and amassed some savings, it would be fun to live in a few exotic locations, like South Africa, NZ, Canary Islands etc. each for 6-12 months.

I was thinking that one way to do this would be to let our main property in the UK and then rent wherever we go to.

At face value, this seems to make a lot of sense:

1. We don't have to waste time and money selling / buying homes
2. We avoid the risk of buying in other countries
3. Chances are, our UK home would make more than the cost of renting in the locations we'd like to go to - so extra money to live on!
4. Our UK home remains as an investment, and is a base to come back to

However, I'm guessing that there are a bunch of things I've not considered. Are there taxes to discourage people from doing this? Are there other financial negatives I've not thought of?

beedeedee

We did this. Used an accountant to sort out taxes and a decent EA to rent our house out for us. Had no problems, although we did pop back to the UK once or twice during that time. It worked well for us. You might want to check how long you can stay in whichever country you go to, without having to register or something?

G_M

Perfectly possible, but a lot of things to consider.

Start be doing a realistic budget to establish your net income (after agent fees, overheads, voids, tax, etc).

To get you started, read:

* New landlords: advice, information & links

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

both from

https://forums.moneysavingexpert.com/discussion/comment/67759912#Comment_67759912

Hoogle

Also make sure your not claiming anything that will stop your claim if you are out of the country for 8 or 12 weeks like ESA etc.

Be advised my parents did the same thing with what I would call a premium rental property ( 7 bedrooms acre garden) was generating £2k + a month rental. 1 year later when they moved on the house needed new kitchen and carpets basically refitted out as the renters had trashed it and stopped paying rent for the last 3 months. Make sure you can afford to live without rental income no one can guarantee rental income even the estates agents that claim to guarantee rental even if not rented, (avoid them as they will get anyone in the property without proper checks) But worst of all no matter how much you love your home do not expect tenants to love it the same in return, you may get lucky or you may get people that really dont care and wreck it.

00ec25

as you have no idea or experience of being landlords please read every word and every link of GM's posts above. You must understand what you are getting into, you cannot and should not rely on a letting agent to cover your A as the chances of you picking a good LA at random are slim as no knowledge is required to call yourself an agent and many are worse than you as they don't know they are wrong so make matters worse than simply not knowing what to do to start with.

to emphasise the financial/tax things:
a) you must provide an address in the UK at which tenants can contact you if you yourself are living abroad. No UK address = tenant can legally refuse to pay rent.

b) the easy solution to a) is to use the agent's address. Make sure they know what that means.

c) understand and register for the Non Resident LL scheme with HMRC. Follow its rules to the letter, you don't want to return to the UK to face an HMRC enquiry!!!

d) you will retain your UK personal allowance whilst abroad, so the rental profits you will declare on your tax return under the NRL scheme will be taxed in the same way as whatever income you currently get. naturally you will need to be sure what the tax rules are in each country in which you reside in terms of non residents in receipt of what is in that context "foreign" income. You may be able to evade tax and fly below the radar, or you may not, in terms of foreign tax rules and authorities since you will, at least on paper, be resident in each country for a while and may thus fall into their tax regime, down to your own moral compass on that and how quickly you can cross a border if needed...

zagubov

Make sure that the Land Registry has a contact address for you while you're away from the house. there have been horror stories of long-term tenants (with overseas landlords) taking out mortgages on the house they were staying in.

agrinnall

zagubov wrote: »

Make sure that the Land Registry has a contact address for you while you're away from the house. there have been horror stories of long-term tenants (with overseas landlords) taking out mortgages on the house they were staying in.

The best option (and indeed one that any property owner should take, even if they live in it) is to register for the Land Registry Property Alert service.

https://propertyalert.landregistry.gov.uk/

pmlindyloo

We have considered this albeit in a small way - ie spending 6 months abroad during the winter.

What has put us off is the fact that it may be difficult to return to our house at the end of the 6 months period if we have rented it out. There is no guarantee that the tenants would move out at the end of the 6 months and we would be in limbo for that time.

Also, am unsure how many people who rent only want a 6 month rental period - most seem to want longer.

Of course this is worse case scenario but on balance we are considering to do 3/4 month periods abroad and getting neighbours to look after the house (yes, we know we would have to inform home insurance)

It does mean that you take a hit on not receiving rent to balance the costs of living abroad but all things considered (we don't have a mortgage) we think this may be the best option.

We want to go during our winter (which we both hate) just for some sun!

sheramber

When my son first went to work abroad he rented through Airbnb for three months rather than live in a hotel.

Now that he is spending most of his time abroad he is going to rent his flat out through Airbnb.

That way he can keep weeks free for when he returns to the UK for holidays etc.

capital0ne

Renting can work, you'll be taxed on the income so you need to do a tax return, not too hard, work you do on the house while rented is tax deductable so it comes of the income, this includes any management fees.

So thats the good side.

The downside, your property WILL be trashed - I've rented a number of times and you will need to be prepared for redecorating throughout, new carpets, as a minimum. You must employ a gardener to maintain the garden. You must have a good handyman to do ongoing repairs, a plumber and an electrician to resolve issues when they arise in midwinter over Xmas say - can be expensive.

Then you need to have gas safety certificate and ditto for the electrics.

Too much hassle - lock it up and go away and enjoy yourselves, but then of course an unoccupied house can be very expensive to insure.....

Good luck - it's not as easy as you may think

zagubov

I don't know much about home swapping but it might reduce the bureaucracy of what you're considering. Saw a newspaper article about it but it would need thorough research.