Letting out house while abroad for 1 year

Schwarzwald

i typically would avoid letting out to family & friends, in the long-term too high risk that it will cause friction ...

but if it were for a limited time like in your case 1 year and your primary worry is the place being trashed, i would try to do F&F ...

GDB2222

Clearly, any net profit within the limited company is yours to do with as you wish, including using it to pay for a shortfall on the letting of your home. So, really, what you’re asking is whether you can save tax by combining the two lettings within the limited company. 

This is the wrong board for tax advice, and you would be better to ask the question elsewhere. 

I suspect that a practical answer to this question is that it would be expensive to set it all up properly with professional advice, and the fees would swamp any potential tax advantages. So, you may end up doing it yourself and just hoping that it works out okay. 

GDB2222

Bear in mind that this may have unexpected tax consequences. For example, capital gains tax when you sell your home. 

subjecttocontract

There is no way I would consider letting my property for a year whilst abroad. I've heard to many horror stories. We have a second home in Spain that sits empty for most of the year but, we wouldn't do it, it's not worth the risk. Once you factor in all the costs, tax, Agents fees, repairs etc there isn't much left. Lots of people do it, in spite for all the legislation and are successful but a few have problems. You can mitigate the risk of it going wrong, to a point but you can't eliminate it completely. Good luck

Bookworm105

Rachel100392 said:

So my question is, is this possible? can I manage the finances for my house through my limited company without transferring the property? And what sort of implications will this have on tax, insurance etc.

TIA

it would be pointless to do so since the company does not own the property itself, it has no entitlement to income nor liability to pay other people's costs on the property.

Company could pay the bills, take the rent, but the net effect is just a cash movement through the company bank and would be excluded from the company accounts as the profit (income - costs) does not belong to the trading activity of the company.
(As it is a close company be very careful about it charging a fee for its property management service since that is a grey area under "income shifting" tax law as "you" are "creating" a cost to reduce your own tax bill)

Net impact: you will pay tax on the net cash paid from company bank account to you thereby negating the whole point of the exercise.

Also as you will be abroad are you aware of the Non Resident Landlord (NRL) scheme?
You need to provide a UK contact address at which the tenant can contact a live person so making your company the agent won't work unless your company has a UK based live person responding to messages.
What the Non-resident Landlords Scheme is - GOV.UK (www.gov.uk)

saajan_12

Aside from the short term v long term debate and just on the financials. What exactly do you mean by: 

Rachel100392 said:

However, I am worried that if my house doesn't receive enough bookings, my mortgage and household bills won't be covered, but if i could offset these with the rental income via my ltd company this would give me more peace of mind. So my question is, is this possible? can I manage the finances for my house through my limited company without transferring the property? And what sort of implications will this have on tax, insurance etc.

If you're just talking about your overall cashflow, then it might even out - eg rental income paid to the company which then pays you (post the relevant tax) may cover your losses on the bills for the short term property. But that doesn't mean you can mix up the money in the company or alter the tax position etc. 

The mortgage and other costs for this property are personal costs, and can't be taken from company funds and create losses for corporation tax. Similarly the AirBnB income would be at personal tax, not routed through the company. 

Even if you let the property to your company on a long term (commercial) basis and the company subsequently took on AirBnB guests, this must be on a reasonable basis. The company can't pay you £x000s in long term rent to get peanuts in AirBnB income and pretend that's a legitimate transaction. 

Exodi

Sorry I know the OP is defensive of their idea but I'm another in the camp of re-considering their rejection of long-term tenants.

Rachel100392 said:

Previous long term tenants have left my rental properties infested with fleas, smelling of dog and cat !!!!!!, absolutely destroyed the garden, didnt report a leak which nearly had the ceiling caving in, yellowed the ceilings even though it was rented to "non-smokers", I could go -on and on. So yes I dont think people staying in my house for a weekend away will result in the same disrespect. But thankyou for your most helpful comment. 

Well this is very fortunate because once you have replaced the carpets and re-painted, as you should anticipate doing between every long term tenancy, the smell of pets and the yellow ceilings disappear. Fleas are easily dealt with in a house without a host and as the leak doesn't appear to be caused by the previous tenants, you would have incurred this repair cost regardless (though maybe you could have purchased a smaller piece of plasterboard). I'm sure you do not intend to let them walk away with their deposit unscathed.

I just can't get behind the logic that numerous short lets are less risky than one. I think your negative experience has clouded your judgement.

user1977

Rachel100392 said:

I haven't contacted my mortgage provider yet, as I am just exploring the feasibility of being able to afford to proceed. But I have previously gained consent to let with my mortgage provider on a previous property which was easy enough (albeit 6 years ago) so I'm hoping it won't pose a challenge.

Despite your views on the relative risks, mortgage lenders tend to prefer longer-term tenancies, presumably because there is a more secure source of income than a holiday let. This is why BTL mortgages are easier to find than lending for holiday lets.

pjs493

There are lots of potential pitfalls here and not a huge number of guaranteed benefits unless you rent long term to a trusted friend or family member. 

Many years ago, I rented a room in a house in Jesmond along with three other strangers. The owners were a young couple who were both going overseas for a year for some sort of work exchange programme between the NHS and an overseas health service. They seemed to be in a similar situation to you and only wanted to rent out their house to make sure they could afford the additional costs of going overseas. They had their next door neighbour manage the rental and deal with any immediate issues such as leaking taps, minor repairs, etc. They let it partially furnished to reduce their storage costs. The downstairs was full of their furniture and upstairs some rooms were furnished and some weren't.

We were all young professionals looking to keep costs down by house-sharing while saving money to get onto the property ladder, or waiting to move with work, etc. There were three girls and one guy in the house. The guy held parties almost every weekend (and sometimes mid-week too due to his shift patterns) and trashed the place often, leaving us girls to sort out his mess. He'd often end up with drunken friends staying over so we'd wake up on a Sunday morning to find a half dressed snoring man in our sitting room. He put washing up liquid in the dishwasher once so that was broken for a while and then needed replacing. He split red wine on a cream carpet and didn't tend to the spill quick enough leaving a large stain that couldn't be removed.

We all had individual contracts. One of the girls had had enough and moved on within a couple of months, I also got fed up and moved out a couple of months later. The first girl found a replacement for herself, but I'd just had enough and basically said they needed to get rid of the guy or I'd go by a specified date. They didn't evict him so I just moved out and they never replaced me. The third girl spent most of the time with her fiance and they were in the process of buying their own home so I got the impression that she was spending less and less time in the shared house as time went on. By the time she moved out (she just paid for the last couple of months worth of rent to avoid any stress and drama), the guy was living there on his own (the first girl's replacement also got fed up and moved back in with her parents). 

I heard along the grapevine that the owners were upset when they returned because of the damage caused by the guy. It would have been a success for them if it wasn't for the bloke. But expensive furniture got trashed, they had to replace a carpet, and there was other stuff that needed repairing or replacing. They'd deliberately stated they didn't want students to try to avoid the issues that were ultimately caused by the guy. Renting to young professionals seemed to be the sensible choice, but it backfired. Perhaps if they'd rented to a couple or a family things would have been different. I also suspect that if it had been four girls, instead of three with one guy, it might have worked out too.

I guess the moral of the story is to make sure you know exactly what you're getting yourself into and make sure you have someone local to deal with day to day issues, or use a management firm. There are lots of things that can make it go catastrophically wrong regardless of how much you try to vet the people you rent to. Be prepared to find that you need to replace things or have repair bills along the way. The risk also increases if you do short term lets such as air b n b style arrangements. The more people through the door, the higher likelihood of problems cropping up. Also, be aware that between short lets you'll need to have cleaners to deep clean the house, change over beds, towels, etc.

p00hsticks

I live (permanently) in an area a bit further down the coast from the OP, which is heavy in holiday lets and second homes. many of the people I know have holiday lets (often inherited) whilst around us several previously residential properties have been bought and done up as holiday lets.

From my observations and hearsay, a year is really too short a time to do hoIiday lets - many holiday makers tend to find somewhere they like and revisit year after year, and new properties need time to build up a regular clientele. A year simply isn't long enough.

Also while the majority of visitors respect their holiday accommodation, not all do. They are on holiday and only staying for a short time so don't bother with housework or looking after the place. Cleaners to turn round the properties are in high demand and so incredibly expensive.