Overseas Landlords- Advice please

[RichManPoorManBeggarmanThief]

DH and I are both British but live in Asia. We are about to complete on a house in the UK that we have bought for investment purposes. It will be let unfurnished (other than curtains/ blinds and white goods) and we are going to pay the agent on a tenant-find only basis. This is the first time we have been landlords, and it would be great to get some advice on what we need to think about once we've completed. We're fortunate that BIL/SIL live literally around the corner and are happy to help with the practicalities (SIL's father is a plumber and knows everyone in the trade in the town) but we need to organise it.The things I know about.

• Register as overseas landlord with HMRC
• Gas safety certificate

I'm sure there's a huge list of other stuff so please share your wisdom with me and anything that we should be wary of.

If you have the maintenence issues sorted, thats most of the headache hone.
Keep a copy of the warranty for white goods/ extend warranty.
The only other thing i can think of is making sure your buildings insurance is renewed every year and issue rent receipts in duplicate so eveyone has a trace for trackjng accounts, tax filing etc....

If you have the maintenence issues sorted, thats most of the headache gone.
Keep a copy of the warranty for white goods/ extend warranty.
The only other thing i can think of is making sure your buildings insurance is renewed every year and issue rent receipts in duplicate so eveyone has a trace for trackjng accounts, tax filing etc....

For our properties in UK, we pay for the agents to do full management. It is for peace of mind especially we are overseas. They select our tenants on our behalf (e.g non- smoker; and no pet), and also get credit check on our potential tenant, prepare check in/ check out inventory list, arrange gardener to attend our garden, any missing or damaged inventory they can deduct that from tenant deposit. Any repair they can arrange quotes (subject to our agreement) and get that fixed. They also collect rent from the tenant and pay to us monthly( after deducting their management fee). They also chase after the tenants if the rent is in arrear. They visit and check our properties every 3 to 6 months to ensure the tenant has maintained it in good order.
They arrange all the meter reading/ contact council etc on each tenancy, and prepare all the gas and electrical safety certificate. They also help us to register as oversea landlord with HMRC. They held the tenant deposit and place it in a separate account which is very useful in case of any dispute at the end of the tenancy. So far all the disputes seems to be very fairly dealt with.
We did paid a bit for all these services, after nearly 15 years, we think it is certainly worth it (pretty hassle free) and I think many tenants especially in London would prefer a fully managed property.

We are overseas landlords as well, with more than one property in the UK. IME tenants are very wary of renting from landlords who live overseas and don't have a management contract in place with lettings agents. They believe that said landlords "reliable family members" will turn out to not be quite so reliable after all, since they are not financially gaining. They have a point. Will you BIL/SIL really get out of bed to deal with a break-in and ensuing repairs at 3am? Or interrupt a holiday to make some calls to deal with broken pipes? Probably not.

FWIW, we struggled to rent a couple of our properties when we went down the "family managed" route - only attracting tenants who were struggling to rent elsewhere, who offered a lower than market rate (tenants had large dogs, poor references etc). As soon as we went to a lettings agency managed route, we haven't had a void period of over two weeks in any property, and have always achieved our rental target. .

You might save yourself a few bob on management costs, but IME, you will lose the savings through lower rental income as a result.

Get a job.

I think the OP has a job, Wallison, hence living overseas.

Good landlords provide housing for those who are not in a position to buy. Being a landlord is a job, but should be treated as such, and not left to "helpful relatives" who have connections.

The deposit is v important - it has to be registered correctly. You also need an electric safety cert as well as gas. It is important to have a proper inventory done (our agent arranged this for us) - they take photos etc and are an independent verification of the condition of the property at the start of this tenancy.

I would also be an advocate for using an agent. I think I have this right but agents generally charge one month's rent to find and vet tenants for you. Alternatively ours charge 10% of rental income, which includes both finding tenants and managing the property - so over the course of a year's tenancy we are only 20% of our monthly rent worse off than if we only paid for the finding fee and the peace of mind is well worth that. Obviously it is possible that tenants will stay longer than a year (ours are currently signed up for two) but we know that it doesn't matter as our agent will find a new tenant as soon as necessary if they break the tenancy.

Finally who will be your 24 hour call person? Tenants need to be able to get hold of someone if there is a problem - otherwise they are likely to arrange repairs themselves and withhold the rent, which could be pricey. I believe they are entitled to do this for some issues such as water, etc. Even if they are not legally entitled to withhold their rent you are going to struggle to get it back without the help of an agent.

Good luck!

The annual gas check is a legal requirement but unless the law has changed the electrical was not mandatory although I had one done for peace of mind.

The landlord's insurance must include liability insurance component for if tenant is injured on property. Having legal added will help if you end up having to evict a tenant. It has to be comprehensive imho as if you have burst pipes etc it can cover loss of rent or putting up tenant in hotel while repairs done. Make sure your heater and pipes are lagged now btw and the tenant is aware of ambient temps.

You will need to notify insurers if house will be vacant at all - check policy for if it is 30 days or more - or it will not be valid.

You will be completing the tax return annually - all repairs, replacement white goods, interest on your mortgage can be used against profit - if this means you are breaking even/going to make a loss then you can apply now for tax not to be taken at source.

The deposit HAS to be placed within the deposit scheme or you have no leg to stand on legally with either serving notice or disputes over damage.

I left tenants with emergency call out numbers for plumbing, electrics and a relative BUT i pay 15% of the rent plus vat, which is taken out of the rent, so that i have an agent dealing with everything.

I am in Europe but no way would i be doing it alone - if in Asia even less so. There are some agents out there who do not do an awful lot for their cut but mine is an absolute godsend and I am not having to constantly worry.

I also had a carbon monoxide detector installed.
Left local window cleaner and gardener numbers.
Have four sets of spare keys.
Told the council tax dept the situation in advance, tenants names etc ditto amenities.

Did you get a BTL mortgage specific for expats btw and if so, who did you use if you do not mind me asking?

Oh yes, I forgot all about the deposit scheme - who will be arranging that for you?

Being a crap landlord is easy, but you end up with crap tenants because no decent ones will touch you with a bargepole.

Being a good landlord really isn't that simple - go the "bargain basement" route, and you are very likely to end up regretting that decision.

The thing that rings alarm bells for me is that you don't even seem to have any idea of what your legal/safety obligations are - if you did, you wouldn't be asking on here. If you were a highly experienced landlord, with many years of tenants behind you, then maybe you could wing it. First-timer, not so much.

I would echo the other posters about getting an agent. We've been overseas landlords for 10 of the last 12 years and we've always used an agent.

We pay 12.5% for full management and it's worth every penny.

Ditto! Management is worth every penny. Is your family really going to be able to handle the tenant who damages your property and/or doesn't pay rent on time? There is more at stake than just arranging a plumber or similar. Also, some tenants want a lot of stuff done - make sure your family won't get sick of answering their calls and emails.
If you are going to do it yourself, don't forget smoke alarms!

Maintenance contracts for boiler etc can be very useful and you can get a package with the Gas Certificate included with the service. The more irritating bits are the minor repairs which an agency will have a handyman to sort out but may otherwise take longer to organise. You can agree a limit within which they can self authorise and deduct form your income without having to contact you. What about an inventory, drawing up contracts, inspections, making sure rules such as no pets are adhered to and garden is regularly maintained. You would need insurance for buildings and your contents and ideally for accidental damage by tenant and non-payment. Normally rent is paid net of UK income tax to o/s ll unless otherwise agreed with HMRC in which case you have to file a tax return, and you will need to use a registered deposit scheme. Presumably you'll also need a UK bank account to pay mortgage and for local expenses (such as when the property is unoccupied and CT and utilities are payable) and maintenance.

Hi, we have let out our property in London while we are in the US temporarily. We also use an agent to manage the property - both in terms of rent collection and general maintenance.

I'd get landlords' insurance to cover non-payment of rent and damage, and check that your buildings insurance is ok with tenants being in your property.

You'll need to register with HMRC as non-resident landlords so as not to pay tax on rental income below a certain level.

A gas safety certificate is mandatory, an electrical safety certificate is not (as someone incorrectly wrote above). However, you are still ultimately responsible for the safety of the property so I'd get a local electrician to carry out an electrical safety check every three years just to be on the safe side (3 years based on a newly rewired property).

Inform the council that the property is tenanted so you're not billed for council tax. In April, our local authority in the UK changed the rules and so we are still liable for a portion of the council tax even if the property is empty.

Have enough in the bank in the UK to cover a couple of months' rent, plus a major repair, eg a new boiler.

Is your property mortgaged? If so, do you have consent to let from the mortgage provider? If not, you'll be invalidating any mortgage agreement and usually insurance cover too. We pay £95/yr for a consent to let document from our bank.

You'll need to out the deposit the tenants give you into the DPS - this is a legal requirement.

We have a contract with our window cleaner who goes to our property every six weeks. We also gave our agent a list of our preferred contractors - plumber, electrician etc - as they all know us and the property and we trust them to do a good job. Our tenants know that they can contact us with issues, should the agent not be helpful (not happened so far but you never know).

Good luck with it - check out the Landlords' Association website for more details.

Wallison, earning money through letting property is not a crime. Nor is being a banker and earning money when people pay mortgages. Everybody pays somebody for where they live.

OP - not happy about your tenant-find only basis. Who does inspections to check for problems? Who chases up late rent? Who deals with notice if the tenants want to leave, or you want to come back? Who arranges the gas cert each year? Who does the inventory, check in and check out?

do you have suitable insurance against malicious damage, legal expenses etc?

don't expect much service even if you pay for full management, you will need to do a lot of chasing.

hopefully you will need none of these insurances but there are crooked tenants out there.

as non-resident landlords, you are not exempt from tax on rental (although you do of course have your tax-free allowance) The non-resident thing simply allows you to receive your rent gross and then pay tax at the end of each tax year. Otherwise your agent is bound to deduct 20% from the rent straight off.

it's all possible but I think you need more help.

Thanks everyone. This is great advice and I appreciate so many responses. Sorry for not replying sooner.

The reason I was against using an agent for full maintenance is that friends who have gone down this route seem to think they do F-all, dont respond that quickly and overcharge for the work that they arrange. It seems crazy when we can get "mates rates" (incl. 24 hr emergency plumber, 800 metres away). I can bet my ass that the letting agent wont be answering the phone at 3am- that's something I'll make sure that I ask them. Also, my personal experience of living in a "fully managed" flat was terrible (no hot water for a week, twice) and I've had much better experiences with "direct from landlord" properties, so probably that's skewed my judgement. However, I take on board all your points. It's definitely worth considering, especially if the overseas landlord/self-managed aspect is likely to put tenants off. It seems the rental agent (there's one - small town) is quite flexible about how they arrange the contract, so potentially we hand over responsibility for contract, inspections, deposit scheme, rent collection etc. and ask them to use our contractors for maintenance. It's not so much the agent fees I object to as much as the inflated third-party contractor fees.

The vendor just had an electrical safety check done and the boiler serviced. Smoke alarms in situ. Gardener is sorted. We have a UK bank account already but are in the process of setting up another one to be used purely for the house.

Michael The property isn't mortgaged- it's quite modest and DH and I both sold our flats in London in 2007 and didn't buy anything else as we moved overseas, so we're just reinvesting the proceeds from those.

RichMan - it is possible as you say to have a hybrid arrangement - where you pay the agent for all the management, but they use your pre-approved list of contractors as first port of call for any work (and you can pre-agree rough rates), and only revert to other contractors where the pre-approved list cannot do the job/cannot do it in time. We have that arrangement with one property. I think it might be the best route for you, given the concerns you outline.

We have had several emergencies in the last 3 years that have required middle-of-night responses (break-in, broken glass door etc) In every case, the lettings agent dealt with it.

as you have found, with a 'managed' service you will probably end up keeping the dog and barking yourself sometimes - but it will help with a lot of things. You don't have to use the contractors that the agent recommends.

There is nothing that either agent or landlord should need to respond to at 3am. If the house is on fire, there are other people that the tenants call!

do make sure the agent is ARLA or similar - the industry is unregulated and anyone can set up as an agent, take your cash and do nothing.

Our agent has a 24 hour line for emergencies. They also use our contractors as a first port of call where I have someone I already use and trust (eg our gasman). With any work that needs doing we discuss it all by email first and agree a way forward. I quibbled one of their quotes for a fence and they got another one (cheaper) so I'm going with that. I'm quite a control freak so wouldn't be happy to just hand over all responsibility!

I believe it is now a mandatory requirement to have a carbon monoxide detector in place now as well - certainly my managing agents told me I had to have one put in place earlier this year (as it happened, there was already one in there so no need)

I agree that the managing agents don't always access the best value services - but I have found that my agents always contact me first to authorise anything that needs doing, and if I know someone who can do it quicker/cheaper than the agents' preferred tradesman, then I contact them directly and get them to do it instead. This isn't a problem.

I think the managing agents, while not the cheapest option, are definitely worth it for taking the day to day hassle out of the situation - I wouldn't want my tenants to have to worry about contacting me directly, especially given the time difference.
It helps enormously that the agents keep up to date on changing rules as well, saves me having to do it!

Richman. We have done this and one tip is to set a limit with your agent ( if you go down that route) of how much they can spend in maintenance without consulting you. We had this set at one limit but found one set of tenants who found a mountain of jobs to do and therefore each month we had far less income than we had budgeted for. We then changed it to so agents had to pass every spend by us. Worked better for us. Good luck!!

We used an agent. They were absolutely outstanding - sorted things out quickly, cleared with us anything that was going to be over a certain amount. I don't think managing a property can be done from overseas, no matter how good your mates/relatives are. They will always have their own lives/jobs which will come first.