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If you started a new life overseas did you sell or rent your property at home?

(28 Posts)
Heatherbell1978 Fri 27-Jan-17 12:47:36

We're emigrating to Australia (Perth) next year assuming we get visa ok. We have a lovely house here in Scotland which we bought brand new in Oct 2015. Emigrating was on our minds when we bought but we wanted to have something here incase a) we didn't move or b) we moved and decided to return.

However so many people seem to just sell up. Part of me is tempted as it's one less thing to worry about insofar as hoping for good tenants and also means we could buy quickly over there and live somewhere that suits us rather than rent somewhere we wouldn't normally live in. But I'm just not 100% certain we'd stay and worry about jumping off the property ladder here...

ifink Fri 27-Jan-17 15:21:22

Personally, no I wouldn't sell up unless of course you have lived in Perth before, are Australian citizens already and know exactly what you are going to find there. Emigrating to Oz is a huge step and one which may people find very tough - even with the best will and hopes in the world, it might not work out and if you have sold up then getting back on the property ladder here might be difficult and costly. Some found it too hard being away and some just thought the UK suited them better after all. You just never know!

citychick Wed 01-Feb-17 11:44:55

no i wouldn't either.
but we will definitely be heading back to UK at some point. out home is in London so we'd never he able to get back into that market if we sold up.

as for tenants , it's tricky and they will never he perfect unless u are very lucky . it's always a pain but u get used to it.

if you are not 100% then don't. our rented accommodation is far from perfect but we have made it home fpr now .

you also need to think about the Scottish indi vote. are you in an area where finding tenants will be easy or will companies be leaving and jobs lost..so you may struggle for good tenants or have to slash your rent?

would you be able to cope with all that from so far away?

best of luck!

Heatherbell1978 Wed 01-Feb-17 11:53:51

Thanks both; I watch a lot of Wanted Down Under and am always surprised that all the couples are planning to sell at home and buy in Oz even those that have never been to Australia before! We might explore the guaranteed rent option but then I doubt that'll give us enough to cover our mortgage every month as they tend to reduce the rental. Whatever the case we'd get an agent to manage the house as we don't want the hassle overseas. No idea what the Indy ref will mean and in some ways that's another reason to sell as we won't expose ourselves to the potential risk if it's a yes vote...

venys Wed 01-Feb-17 12:00:39

Absolutely get an agent to manage of you rent out. It's too hard otherwise. Just ensure there are no tax implications on the rental revenue in Oz. I know if you stay here you get taxed on the entire income now not just the profit.

citychick Wed 01-Feb-17 12:10:55

nicola sturgeon will be after you for sure.

unless you are really financially secure you really need to be able to cover your mortgage
as an example , our London home has a mortgage. the tenants pay double the mortgage in rent . then tax. then agency fees. there isnt much left after all bills paid. if there was any major work required we'd have to pay up out of our savings.
yes that damp patch i am looking at you grrr

it might be worth researching ms sturgeons views on non domicile landlords . she will be very anti landlord and very pro tenant.
there are some tax breaks though so worth looking into

Heatherbell1978 Wed 01-Feb-17 12:42:32

citychick yes we can cover the mortgage. It's £1000 a month (although we overpay at the moment) and we should get £1200-£1400 a month rental so we'll cover mortgage and agency fees. I think the tax implications work on the profit so we wouldn't pay much if any. The guaranteed rental is something w could do where the agency are effectively our tenants and give us a guaranteed rent whether it's occupied or not. But they rent they'd offer would be at a discount so may not cover the £1000.

farangatang Wed 01-Feb-17 13:50:02

OP, if the numbers work then I would keep the property and rent it out. You never know what will happen - you might decide in the future to move back one day and regret giving up your home.

I'd keep the house and reassess in a year or so how the arrangement is working out for you.

We've moved abroad twice. The first time we kept our property and rented it out, but had issues with the tenants after a year or so and also didn't want to keep renting in our new country, so we sold it and used the proceeds as a deposit for our house purchase. After moving abroad again, we kept this property and are currently renting it out at a great price which means it doesn't matter that we are renting in our new country. I can't see any point getting off the property ladder altogether, especially as the cost of housing is only going to rise!

My advice would be to keep it and rent it out. Once you've established you want to stay in your new location, then you could look into a sale to fund a new purchase. As you only bought in Oct 2015, the price will not have appreciated significantly , I imagine, so you've nothing to lose by holding on to it for now.

Good luck with your move smile

citychick Wed 01-Feb-17 14:36:42

I agree with Farangatang.
You will be taxed on the net income, and you should decide whether you get your agency to deduct tax at source or register as non resident landlords. You'll have to register anyway, but we get our agents to deduct tax anyway so we don't have to worry about that from month to month.

So...and I hope I've got this right...you'll have
Gross income... then deduct
Estate agent fees
Mortgage interest - not on interest only mortgage though.
Repear jobs amount
Insurance

You'll be taxed on the amount there after...you can also claim 10%for wear and tear
So it's 20% of what's left over.
If your agents do the tax, then you'll need to refer to their notes too.

You'll also need to keep a note of how many days you have been in the country, i.e. UK for the year you will be filing a return for. This will go in your self assessment.

Also don't forget that if the mortgage is in joint names, i.e., you and your OH, you will both need to file a return. HMRC see it as a 50/50 split regardless of who pays the mortgage or receives the income from any rent.
That's a joint mortgage.

I am no expert, but that's how I understand it.

Check the gov.uk website, it will have all you need to know.

If any other poster has extra info, I'd be keen to hear about that too!

Heatherbell1978 Wed 01-Feb-17 15:15:32

Thanks citychick. I did a rough calculation and figured we'd be taxed on around £9k a year but does the annual tax free allowance not then mean we wouldn't be taxed as it's somewhere in the region of £10k right now? We wouldn't have any other income in the UK if we're in Oz but not sure if that still applies as a non-resident.

OlennasWimple Wed 01-Feb-17 15:20:07

We rent out our London home as we intend to return. The rent doesn't cover the full mortgage and agency fees (essential to get the fully managed service when you are so far overseas IMO), but we see it as the cost of being able to come back home, and DH's pension.

We complete a tax return every year, and never have tax to pay, particularly as you can include lots of things like repairs on the return, which lowers your taxable income - in our case, below the £10k threshold. Make sure you get a UK based accountant and sign everything to give them the ability to deal with HMRC on your behalf before you leave.

citychick Wed 01-Feb-17 15:43:19

Hi, yes, that sounds right. Sorry...forgot about the tax free allowance.
Our agency take the tax as I mentioned, but we usually over pay so you'll no doubt get a refund.

OlennasWimple Wed 01-Feb-17 16:07:59

city - you can instruct the agency not to withhold the tax, if you prefer to do it that way around

writergirl747474 Thu 02-Feb-17 02:30:25

I work in mortgages/money so can offer a couple of pointers on this.

Worth pointing out that you either need consent to let from your current mortgage lender to let your home or to remortgage to a buy to let mortgage. New rules mean BTL mortgage lenders will require your rent to be about 145% of your mortgage (So £1450 on a £1000/month mortgage) - is that doable?

Be VERY wary of "guaranteed rent" letting agents. Where's the guarantee coming from? Do they have enough money to pay you if there's no tenant or one who stops paying? Or will the agent use your rent to cashflow their business rather than giving it to you? Worse case scenario is the agent disappears with your cash and leaves you with a tenant with whom you have no direct relationship/contract.

MakeItStopNeville Thu 02-Feb-17 02:39:34

As someone who sold their home and then watched its price go up £300k in 5 years, don't sell if you don't have to! That said, we only sold as we found being landlords really annoying and found it a distraction to our new life.

EagleIsland Thu 02-Feb-17 03:40:08

We were in negative equity on our house when we left the U.K. We posted the keys back to NRAM. We tried to sell it.

We didn't want to rent it as we didn't want to be financially tied to the UK

NightCzar Thu 02-Feb-17 04:03:39

I rent out my flat in London, but as I am an Australian resident for tax purposes, I declare that on my U.K. Tax return and pay no uk tax. I pay tax in Australia on the rental income, but you can net off expenses over a few years. So when we had major remedial work done, I could net it off over 5 years or so. Same if we had a new kitchen. Australian tax law is kind to landlords.

I regard my London flat as my pension and also just a little safety net in the uk property market.

CarelessWispas Thu 02-Feb-17 04:06:07

You do know you're completely liable for tax on your UK property rental income in Australia, right? You'll get a tax credit for what you've paid HMRC but in your case that sounds like a zero value credit.

HMRC and ATO have full info exchange now too. Two different tax years, different deductible rules, different income tax rules and different CGT rules (you'll be liable under dual tax agreement law under both countries with HMRC credit paid to ATO).

It's also worth knowing remortgaging on a UK BTL as a non resident with your primary income generated in any foreign currency is subject to new rules to offset forex risk.

On top of that there's your risk of holding any asset in GBP now Brexit progresses. GBPAUD has already been an absolute bloodbath over the past year.

Good luck whatever you decide to do. I'm a dual Aussie-Brit and love both countries.

JC23 Thu 02-Feb-17 04:24:51

We've been in Australia for nearly 4 years and rented out our house in England. It's not easy being a landlord and there have been times when we've regretted that decision but ultimately the house is going up in value and we do rely on the rental income. We don't pay any tax as the profit is under our annual allowance. I'm frightened of what will happen if we don't have tenants for a period of time or a big repair bill. We're keen to sell up and buy a home here when that's possible.

nooka Thu 02-Feb-17 04:27:18

We rented our house when we moved to the States and I really wish we'd sold instead as it was very stressful and we made a significant loss. We had it managed but still managed to have tenants that ran up a series of small bills that we had to pay and caused a huge amount of damage. The managing agents were crap, so much so that they didn't even manage to win our case at the deposit tribunal despite $1,000s repair costs (they didn't attach any of the quotes to the case notes).

My sister on the other hand had great tenants, no issues, broke even on the rental and sold at a profit. So it can turn out in different ways I guess.

thetoothfairywhoforgot Thu 02-Feb-17 05:12:16

There are a few variables that make it really hard to decide what to do: house prices, mortgage rates, tax and currency exchange rates.

We moved to NZ 8 years ago when the exchange rate was 2.8 to the pound. Now it is 1.8. So you can lose 30/40% of your capital just by moving it. Or you can make money.

We benefited from the fall in mortgage rates.

Tax wise, NZ has an exception on foreign income for 4 years. Now we pay tax on the income from our property - and we cannot deduct the mortgage payments. Even interest. So we are liable for about 30% tax in NZ on our UK income. You need to check out the situation in Australia as well as the UK - we are well under the threshold there.

We kept our house as a hedge, so we could always go back if we wanted too. It's worked well for us, and we have benefited from the price rises in the UK. You have to expect costs though - we've had a new boiler, painting through, new carpets, a void of three months, new dishwashers etc.

Heatherbell1978 Thu 02-Feb-17 08:12:18

Thanks for all the comments-lots to think about! We'll definitely need to get an accountant by the sounds of it to help us work it all through.

A few things work in our favour - it's a brand new house so we wouldn't be expecting to shell out on any major repairs in the next few years as it's all under warranty and we have a good friend that works in a reputable, nationwide, letting agency so we'd be pretty comfortable leaving it in their hands. The house itself would most likely attract a family (4 bed, nice area, good school catchment) so potentially a longer term tenant.
writergirl I had a word with our mortgage provider who said they were likely to approve a consent to lease if it's a temporary arrangement which it would be as we'd sell the house if we decided to stay in Oz. We've also paid a lump sum into the mortgage recently and overpay by £500 a month so hopefully see us as a reliable customer.

I think if the exchange rate were better we'd consider selling as we have around £150k in equity which is a decent deposit in Oz (especially in Perth where house prices have dropped) if we were getting $2 to £1 but right now, we'd lose out massively with the exchange rate.

MiniDoofa Thu 02-Feb-17 08:25:19

Perth is awesome!!!
<misses point of thread>

Newbrummie Thu 02-Feb-17 16:47:41

Literally counting the days til I get back to Freo 😁

Newbrummie Thu 02-Feb-17 16:50:00

Heatherbell1978. Rents have dropped by over $150 a week in the nicer areas subiaco, Nedlands, shenton park etc. I think you'd do well staying on the housing ladder in the uk and renting there tbh. $2000 per month in rent v's $6000 in mortgage on the same house

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