Put the house on rent and move abroad - opinions?

user1168934

I have an opportunity to move to Australia in the next year or so. I am thinking of moving but I do not wish to burn the boats just yet - I would like to keep the family home here in the UK if I can ,until I have lived in Australia for a couple of years. The obvious option is to put it on rent and in future when I am in a position to buy in Australia then sell this one. I will speak to the mortgage broker shortly to run some numbers. I am also aware that there may be capital gains to pay at the time of selling.

Surely this is not a novel idea and I am sure lots of people have done it before so I was wondering if there is anything I am overlooking in terms of owning a rental property in the UK while settled abroad? Any pitfalls, tax implications or any other opinions in general?

Woolsery

Ex-pats forums should be most helpful for this sort of info.

user1977

Is this so you can move back into it if necessary? You are bearing in mind the likely timescales for getting vacant possession from a tenant?

user1168934

user1977 said:

Is this so you can move back into it if necessary? You are bearing in mind the likely timescales for getting vacant possession from a tenant?

Yes, and yes I have thought about it.

TripleH

SiL and husband do this. Do you have family in the UK who will let you use their address for correspondence & tax details?

canaldumidi

Obviously all the normal rules and regs regarding letting apply, so read

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?

As an overseas landlord, note additionally

* who will manage the property? You? Family/friend? professional agent?

* if rent is paid direct to you (not a UK based agent or family), then either

a) the tenant should deduct tax before paying you (as it's hard for HMRC to chase you abroad for the tax!) or

b) you obtain a consent from HMRC to receive the rent gross, and give a copy to the tenant. Read

HMRC (Non Resident Landlord Scheme).

If rent is paid to a UK agent (or your mum) then HMRC can/will chase them for the tax owed.

* You must (Landlord and Tenant Act 1987 S48 ) provide the tenant with an address in Eng/Wales 'for serving notices' on you. This can be any address eg your mum, your agent, whatever, but legally if the tenant writes there it is assumed you receive it. Even if you don't!

* it's advisable to have a process in place to manage repairs etc, either delegating this to an agent, or having contact with a list of local contractors, or an insurance type maintenance contract to cover gas, electrics, plumbing, roofing etc

* and of course you cannot assume if things don't work out in Aussie you can come back and quickly/easily remove your tenants and move back in. Especially given the gov plans to increase tenant protection, remove S21 process, and replace it with... who knows what as yet.....

Scotbot

TripleH said:

SiL and husband do this. Do you have family in the UK who will let you use their address for correspondence & tax details?

You use your Australian address as you need to show you are non resident for taxe purposes 

canaldumidi

Scotbot said:

TripleH said:

SiL and husband do this. Do you have family in the UK who will let you use their address for correspondence & tax details?

You use your Australian address as you need to show you are non resident for taxe purposes 

Depends on the purpose. For tax purposes yes, Australian address, or UK accountant, or agent/'correspondance' address.

Much depends on your tax status - UK or overseas resident for tax purposes? Whether your rental income is paid to someone in the UK or to the overseas LL, and whether HMRC have granted dispensation to receive the income gross.

https://www.gov.uk/guidance/paying-tax-on-rent-to-landlords-abroad

But for the tenant it's a different matter. You can use your Australian address or email/phone number for informal contact, which can speed up and smooth over any issues in the first instance.

But you cannot ignore the legal responsibiliy of all overseas landlords to provide their tenant with an address in England or Wales 'for serving notices' ie for formal complaints, legal notices like notice to end the tenancy and court papers.

Once again, read

Landlord and Tenant Act 1987 S48

Scotbot

I have done it. Renting the house was a pain in the butt. You will need an agent who can organise repairs/ maintenance/ safety checks etc. Plus finding tenants checking references. Lots of people will warn you of the problems with evicting tenants. My problem was keeping the bu99ers. 

You can't just pick up the phone, well you can but since it will be the middle of the night over here no one will answer

Get insurance for non payment of rent

Tax wise you will have to do annual tax returns both here and there.

Check out the  expat sites. Pomsinoz.com used to be very helpful haven't been on in a while.

I think it is sensible to rent as Aus may not be your cup of tea but whatever you do you won't be able to time it exactly.  If you sell you may have to move before it goes thru and if you rent you may have to wait before you can get it back

tellmeagain

I done this back in 2006, house wouldnt sell due to poor market at the time, so we rented it out and moved to Australia for 10 years. There was lots of dramas over the years with tenants and agents, however when i recently sold it I was lucky that the value had doubled and I had benefited from 10 years rent. In all fairness thought the house was wrecked when we did come back - so needed a full refurb - including new ceilings in some rooms     

If you do sell at any point and plan to transfer your equity to Australia,  take into account exchange rate fluctuations - the fluctuations in small amounts of money can be insignificant, but if you are exchanging large sums the variations in what you get can be eye watering...so definitely watch the exchange rates and do the maths.

freesha

Is moving halfway across the world REALLY the best time to set up a residential lettings business?