Letting main home to rent abroad

macman

There is no legal requirement to have an electrical safety certificate (in England) in order to rent a property.
OP I'm puzzled by your phrase 'are there taxes to discourage this...'? You will be subject to income tax on your rental income, just as you would on any other income.

steampowered

I lived abroad for a few years and would recommend it.

I'm not sure it would be worth renting out the property for just 6 months though. It hardly seems worth the faff and costs involved with being a landlord if you are going to be back in the country in a few months time anyway.

If you were going abroad for a longer period of time, I agree that renting out the property is a good idea.

Thrugelmir

pmlindyloo wrote: »

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.

6 month letting periods will greatly restrict your ability to attract potential tenants.

Mutton_Geoff

pmlindyloo wrote: »

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)

You would need to take out different insurance. Most house insurers will not cover you after 30 days vacant. Your level of cover will also reduce drastically unless you are prepared to pay huge premiums (eg 10 times normal rates).

sheramber wrote: »

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.

Again, on the insurance topic, I found many home insurers will not cover you for AirBNB lettings.

ent_moot

Thanks all - very helpful.

OP I'm puzzled by your phrase 'are there taxes to discourage this...'?

Well, with the shortage of houses, I'm surprised there aren't laws or taxes in place to reduce the incentive to let properties. If it was less lucrative to let, then fewer people/business will buy additional properties leading to reduced demand, and a reduction in house prices. This would mean more people could afford to buy instead of rent, meaning less of an equality gap.

I'm not much of an economist. What economic forces are at play that prevent all property gradually being gobbled up (i.e. bought and let out) by the minority of very wealthy?

knightstyle

We sold our UK house and bought a flat which we let as holiday lets through Hoseasons. Worked well for us and we could have the flat when we visited the UK.

00ec25

ent_moot wrote: »

I'm not much of an economist. What economic forces are at play that prevent all property gradually being gobbled up (i.e. bought and let out) by the minority of very wealthy?

actually quite a bit of "social engineering" has been done, for example:

• higher rate SDLT (+3% supplement) introduced on the purchase of all property bar your own home that you live in (a 500k house will now cost 30k in SDLT compared to 15k before the change)
• purchase via a Ltd company heavily taxed as SDLT rules different
• properties >500k owned by companies now subject to annual lump sum tax on top of any tax due on rent (eg £3,500 per year for a property worth between 0.5-1m). Property over 2m costs £23,550 per year, those >20m cost £220,350 pa
• tax relief on mortgage interest payments reduced to only basic rate for higher and additional rate taxpayers.
• calculation method radically altered so those with medium to high leverage are now faced with the very real prospect of being taxed on paper profits that do not exist as actual cash profits. They pay more in tax than they bank as rent.

obviously the VERY wealthy just pay more without a care, but without doubt the tax changes have greatly altered the BTL market place for small time investors

saajan_12

ent_moot wrote: »

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- agree don't buy & sell in quick succession,
   but why not sell once and invest the money elsewhere
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!- another less demanding investment could also return the same / more as a rental, so you can use the investment returns for your rent and money to live on
4. Our UK home remains as an investment, and is a base to come back to - ineffective as a base, since it can take 9months to evict tenants, during which you can't use the property..

However, I'm guessing that there are a bunch of things I've not considered. Are there taxes to discourage people from doing this? - you'd pay income tax as with any income from a job / investment. Also council tax while the property is empty.
Are there other financial negatives I've not thought of?

Income from letting your UK home is much less than rent x 12:
- voids in rental income between tenants or if they stop paying, taking months to evict.
- redecorating / repair costs
- tenancy set up / changeover costs (viewings, referencing, inventory, contract drafting)
- LA / management costs to deal with tenant queries, instruct repairmen
- insurance, Gas Safety Cert, deposit protection
- income tax

If you're overseas you need someone to deal with tenant changeovers, repair callouts etc, which they might do in the quicker but less cost efficient way. Also, the many landlord responsibilities ultimately stop with you - even if you delegate them to an agent, there are expensive reprocussions if they are not done and it can be difficult to prove a direct loss and recoup this from your appointed agent. e.g.
- deposit protection (unable to evict via S21 and penalty 3x deposit)
- timely repairs
- gas safety cert
- tenant checks
- serving valid notice / following through with eviction

Essentially, being an overseas landlord is difficult and costly. Also, due to the time taken to evict tenants, you can't practically use it as a UK base. Instead, I would sell your UK home and invest in something else less hands on, but which returns the same as your rental profit (rent income minus costs above).

Comms69

ent_moot wrote: »

Thanks all - very helpful.



Well, with the shortage of houses, I'm surprised there aren't laws or taxes in place to reduce the incentive to let properties. If it was less lucrative to let, then fewer people/business will buy additional properties leading to reduced demand, and a reduction in house prices. This would mean more people could afford to buy instead of rent, meaning less of an equality gap.

I'm not much of an economist. What economic forces are at play that prevent all property gradually being gobbled up (i.e. bought and let out) by the minority of very wealthy?

Well there isn't one. BUT there isn't a limited supply of properties. There's a shortage, but the supply is constantly growing, just not meeting the needs.


If properties were all bought up and rented, a company would come along to create properties which they could market to buyer-occupiers.


That's the beauty of a free-market system

MarkBargain

pmlindyloo wrote: »

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

It must be a very limited market as students would want 9 months Sep to May to cover the term, and most other people want to rent a home to live in longer term. The latter are the sort most landlords want as they are more likely to look after the house. I wouldn't want the hassle of letting to short-term tenants.