Purchasing House in the UK and moving to another country

getk

hi folks,

My friend asked me for an advice and this is his situation

He is around 40 and with family and he is planning to move from the UK (entire family) to Australia. He got a 4-Bed house with mortgate in the UK already, though not sure how much % is paid off.

He is unsure if the abroad gig works out, so was thinking of a backup plan.

So the options he asked/we discussed were

1. He can downsize to a 2 or 3 Bed house and then rent it and move abroad, though mortgage may be BTL. May prefer a new build , that way not much to maintain. This way he can keep some of his address in the UK and any Credit checks with an agreement with leaseholder?
   
2. Rent his existing house, though the house has garden/hedges etc, which would require lot of maintenance.
3. Sell everything and move. In case of returning back, start from scratch.

My advice (for each option) were

1. BTL interest % rates are high, so may not be worth at this time. Also not sure how the tax implications will work and he may need to do self assessment of overseas property?

2. My understanding is once you 'rent' your primary home, 'captial gains' will impact.

3. This may be best option in current time, as he could get cash out and could purchase house in new country? Also another option would be to sell his existing house in 6-9months time, that way it can be a smooth transition

Just checking if you/colleagues have done a recent move outside the UK and any such preferences/thoughts would be great

theartfullodger

What expertise in being a landlord that makes him think we will be able to - in say less than 6 months - recover a rented house, please?

getk

theartfullodger said:

What expertise in being a landlord that makes him think we will be able to - in say less than 6 months - recover a rented house, please?

Sorry quite didn't get your question. He is not planning to recover anything, but backup plan (just in case if he want to return back to the UK in next 1 year)

p00hsticks

getk said:

theartfullodger said:

What expertise in being a landlord that makes him think we will be able to - in say less than 6 months - recover a rented house, please?

Sorry quite didn't get your question. He is not planning to recover anything, but backup plan (just in case if he want to return back to the UK in next 1 year)

The point artful is making is that it's not easy or quick to get an tenant out so it's not a very good back-up plan if he's thinking he'll just be able to move back in if things don;t work out down under. 

user1977

It might be easier if your friend posts here himself rather than anything being lost in translation...

SiliconChip

With options 1 and 2 your friend no longer has a home in the UK, it becomes the home of the tenants, so he won't retain a UK address - the tenant will be perfectly entitled to bin any mail that is sent to the house that's addressed to your friend. 

housebuyer143

SiliconChip said:

With options 1 and 2 your friend no longer has a home in the UK, it becomes the home of the tenants, so he won't retain a UK address - the tenant will be perfectly entitled to bin any mail that is sent to the house that's addressed to your friend. 

Or use it to steal his identity and defraud him.

Brie

how can anyone manage a tenant from so far away.  The only way I'd consider it is to put the place with a rental agency or the local council that will guarantee the rent.  But try to get the tenant out when you need the place back....

Personally I'd sell.

SDLT_Geek

If letting a property out and living overseas, the rules about deduction of tax at source from the rent need to be considered.

_Penny_Dreadful

getk said:

hi folks,

My friend asked me for an advice and this is his situation

He is around 40 and with family and he is planning to move from the UK (entire family) to Australia. He got a 4-Bed house with mortgate in the UK already, though not sure how much % is paid off.

He is unsure if the abroad gig works out, so was thinking of a backup plan.

So the options he asked/we discussed were

1. He can downsize to a 2 or 3 Bed house and then rent it and move abroad, though mortgage may be BTL. May prefer a new build , that way not much to maintain. This way he can keep some of his address in the UK and any Credit checks with an agreement with leaseholder?
   
2. Rent his existing house, though the house has garden/hedges etc, which would require lot of maintenance.
3. Sell everything and move. In case of returning back, start from scratch.

My advice (for each option) were

1. BTL interest % rates are high, so may not be worth at this time. Also not sure how the tax implications will work and he may need to do self assessment of overseas property?

2. My understanding is once you 'rent' your primary home, 'captial gains' will impact.

3. This may be best option in current time, as he could get cash out and could purchase house in new country? Also another option would be to sell his existing house in 6-9months time, that way it can be a smooth transition

Just checking if you/colleagues have done a recent move outside the UK and any such preferences/thoughts would be great

As someone who has experience of living in Australia whilst managing BTL in the UK here are some things I learned along the way. 

It is extremely difficult to get a mortgage for a UK property whilst you are resident in Australia meaning you can find yourself stuck on your lender’s SVR. It’s not impossible but expect high mortgage arrangement fees and interest rates. Staying on the lender’s SVR was actually the less expensive option. 

How the UK BTL is treated under Australian tax legislation will depend on your friend’s residency status in Australia. If he is a permanent resident or citizen then he will have to declare the rental income to the ATO and the value of the property may be considered as part of his overall wealth. It would be wise for him to consult a tax adviser who is well versed in both UK and Australian tax legislation before he starts making any decisions with regards to the property, pensions, stocks and shares etc. 

Managing let’s from the other side of the world can be a PITA. I manage my BTL myself but once I was in Australia I used a letting agent. I had some awful experiences with some useless letting agents who were worse than any tenants I’ve ever had. I’ve also helped a couple of Brits out in Australia also with investment properties (former homes) back in the UK who were being taken for a ride by letting agents either by malice or ineptitude. 

Unless your friend is a permanent resident or citizen the chances of him being able to buy a property in Australia is slim to none if he requires a mortgage. No one is going to give a temporary resident a mortgage and there’s a higher rate of stamp duty to pay for those who aren’t permanent residents/citizens. 

My advice, if the move to Australia is expected to be permanent, would be to sell the property and look at the most cost effective way of transferring those GBP into AUD. 

If he decides to maintain a property in the UK then using it as his correspondence address is madness. There are companies who offer virtual mailboxes with real street addresses, not PO Box addresses, to have pose sent to. 

BobT36

If renting out a house in the UK, will also need ANOTHER UK address for the tenant to deliver notices to. Else no rent is due. 
So a management agent or someone will be necessary.