How difficult is being an overseas landlord?

[Bablond]

We're moving overseas next year and will rent for our first 1-2 years there while we figure out areas etc. We have a flat in London that presumably will go up in value over that time, so would be great to keep it if we can (for as long as possible, but we may need to sell when we come to buying overseas eventually).

How difficult is being an overseas landlord (& part of the residents association as share of freehold)? I think ultimately the rent wouldn't quite cover all of our costs, so we'd be putting extra money into it (with estate agent fees etc), but hoping to make that back when we do sell. Our local area is due to undergo regeneration in the next 5 years.

Don’t be silly @discobrain
Rent it out through an agent with the goal of keeping the property safe and sound rather than making money.

There are a number of factors. 1. Do you need a landlord license in your borough? 2. Are you renting through an agency or directly? 3. Does your mortgage allow this?

My tenants are former colleagues, they are renting way below market rent on the understanding that if there are issues they need to liaise with plumbers etc and I'll cover the cost. I have applied for a landlord licence. I keep up to date with gas safety checks and electricity checks etc.

If you rent it out through an agency, they would deal with all of this for you and remind you when checks are due. Your insurance may also require regular property checks, again the agency can do this. Also check with your mortgage provider to ensure you are allowed to rent out the property.

PS The reason I'm renting to people I know is that I can trust them to look after the property nicely. That brings me peace of mind, rather than random people the agent found.

Hello, I've lived overseas for 15 years and rented out two properties that whole time.

The key is to get a good managing agent. You pay a fee but it's worth it.

I've never had any issues.

One thing to check is whether or not your mortgage provider allows you to rent out as you are then considered a buy to let candidate. Nationwide simply issued me a letter saying they allowed it, some lenders don't.

I pay 12% management fee with leaders. They are a step above incompetent but it means I have some9ne there to look after the house. Rent/ fee just about covers mortgage and I repaint red-carpet every 4 years.

Highly dependent on your agent TBH (although most of them are at least moderately rubbish)

I used to have an excellent agent, but he retired, so now I'm with a big name - it's fine, stuff isn't always done quite how I'd do it, but rent is paid, certifications etc done on time, house redecorated between tenants/if very long term then when it needs doing.

You'll have to do UK tax returns, and figure out how that meshes with tax in your new country - but otherwise, it's all over email anyway.

You need to have a good managing agent basically- which costs. They also have to withhold tax on your behalf so check the numbers still add up. You should check whether it is worth it- as you would have to pay tax on the income and a lot of things aren't deductible- and if you are not breaking even on a gross basis it may be expensive.

Make sure your mortgage term doesn't run out while you're overseas as it's pretty much impossible to remortgage if you're not living in the UK. Or get a buy to let mortgage before you go.

We bought, and got a BtL mortgage from overseas It wasn't simple but it can be done. However, if you can sort it before you go it would be easier

We've been doing it since we left after asking our bank for 'permission to let'. This was granted on the understanding we planned to return to the UK - which we were.

We keep some cash in a separate account to cover unpaid rent and big repairs. We pay tax on the income in our new country so it is not always economically sensible.

One new issue is that our bank have just withdrawn our current account. We have one attached to our mortgage so are swapping to that. But I am concerned they may withdraw this other account and our mortgage. It seems the laws have changed recently and this is happening to more people.

Aside from what others have said, make sure you fully understand the financial implications. I need to declare the rental income in the UK and in the country where I currently reside. Tax here (overseas) is higher, so there is less left over than if I were based in the UK. The tax years don't overlap either, so I need to do all the calculations twice. The first time I hired an accountant, now I do it myself.

If you think you might end up selling while abroad then check if / how much capital gains tax your new country of residence charges. Where I am now CGT is also payable on residential properties and overseas properties, which means that for many it makes more sense to sell before moving.

Never heard of a "landlord licence". I've been renting a London property out for about 10 years, 4 of which I did from abroad.

OP, I use an excellent managing agent and it's all been very easy.

@ChocChipHandbag my borough introduced it last year for all private rental landlords, before it was just HMOs. I would check your council website to make sure there are no plans to introduce this, I only found out by accident.

You can register with HMRC to receive your rent gross if you are non resident for tax purposes. You then just do an online tax return each year. If your rent minus expenses is less than the Personal Allowance (currently about 12570GBP) then there is no tax due.

I second the other comments about getting a good agent.

We did it successfully twice.
As others have said get a decent agent.
Complete your UK tax forms.
Understand that returning to the property when you want to may be difficult.
Get permission from your bank and take out good landlords insurance.
Also agree with checking CGT as that did apply to us in the end, although not that much.

We've just sold our UK house, but rented it out for the last 6 years.

We vetted all the applicants and ended up renting to friends of friends of friends. They moved out but recommended another family to move in, so we had a Skype with them and they seemed good + paid 6 months rent upfront. Honestly, both sets of tenants treated the house better than we did, so they were easy from that perspective.

In terms of maintenance we had trusted friends who are tradesmen who could do the jobs that needed doing (eg electrician, plumber, builders), and DH took care of coordinating that with them and the tenants as needed. So we negotiated a fee of 4% with our agents because they were essentially just collecting rent / advising on contracts etc - everything else was with us.

Totally agree to look into the financial side of it - ie the mortgage and taxes.
Our original mortgage provider granted permission for us to rent it out for 1 year, then extended for another year, but after that refused and said we needed to revert to the default/standard rate (or whatever it was called) as they couldn't offer us other products as non-residents. In the end we moved to HSBC expat who were pretty much the only other company who would touch us. It might've changed now, but at the time they insisted on opening a current account with them too and maintaining a balance of min GBP 60k. We managed to negotiate a small monthly fee in lieu of the 60k balance. But if I recall it was a right pain to open and took a few months.

We were classed as non-resident landlords so yes still had to do a UK tax return and also declare the UK rental income in our tax return here. But that was all quite straightforward and we always managed to remain just below the personal allowance each.

Selling was quite straightforward too actually... no CGT where we live, though obvs have the UK side to contend with for our 2023/24 tax return.

So all in all it was pretty easy really. A few hurdles, but I am used to admin and challenges so none of it bothered me, though DH was stressed at times god knows why as I was the one doing it all!!

Oh my agent will tell me if any changes, I pay them to keep on top of the rules and regulations.

Yes a good agent will keep on top of new regulations, take care of gas certificates etc. My borough required the whole street to become HMOs, regardless of the size or layout of the actual property. It cost me £550 to the council (definitely felt like a money making scheme for the LA). But it was the agents who told me - and then proceeded to offer me their services to deal with it. I declined as it was just an online form , which was long and not straightforward, but didn't take long to submit.
Be aware of new regulations about evicting tenants. If there's a time limit to how long you want to let it, be sure the lease reflects this. Corporate lets are good too, but they are usually in high priced areas.

@ChocChipHandbag what borough are you? Hackney have them too.

Tower Hamlets.

A few issues to consider:

1. As others have said, do it through a letting agent- a decent agent should be able to provide a full management service, which is what you need if you are overseas. You NEED to be able to trust your agent, because if they get things wrong, or don't keep certain paperwork up to date and so on, you won't be able to issue a Section 21, which would be a problem if, e.g. you returned to the UK and wanted to live in your property.

A decent agent will likely be willing to deal with the resident's association, potentially for an additional fee.

2. As has been said, you need to check with your lender as to whether they'd allow you to go to a BTL mortgage. If market rent won't cover the mortgage, they may not be keen, but usually I believe it's pretty straightforward. AFIAK, your interest rates may be higher (if you're currently on a fixed mortgage, they almost definitely will be).

3. You need to have a plan for unpaid rent and void periods. Some landlord insurances will cover unpaid rent- but I don't think any will cover periods when the flat is empty. Even in a really popular area, it's not always possible to have a tenant move out and then another move in the same day- someone will need to check the property for damage, and there may be time needed for repairs and so on. In some cases, you may not be able to find a tenant straight away- even in a popular area, there are often times when people don't want to move (e.g. around Christmas).

4. If the property needs repairs, you have to deal with them (and pay for them) straight away. As a home owner, you might put up with not having hot water for a week or two- you can't ask a tenant to do this, so you'd be paying to house them elsewhere, and for a new boiler etc. Insurance may pay out retrospectively, but you'd have to find the money up front.

It is possible, and might work out, but is it all really worth it for a flat you might need to sell anyway, and may not go up in value as much as you hope?

We haven't had any issues

In London , I'd a very reliable electrician who had lots of tradespeople in his book.
After a somewhat disastrous set of tenants, I stopped using an well regarded agency ( who did nothing ) and paid him a monthly retainer. I used him to manage both our properties and he grew a business out of my recommendations. Now he does the maintenance and his wife does the lettings, vettings and paperwork.