Pro and cons of renting out our UK house

[grumblegrumble]

We're moving abroad for 4 years, and we need to do something with our current family home. The options are -

1. leave it empty to use when we visit the UK (but problems with insuring an empty house and I do disagree with leaving family homes unused)

1. rent it out

1. sell it

We're torn between 2 and 3. Instinctively, I want to keep it. But we are very unlikely to live in it when we return - we'd planned to move in 3-4 years anyway. And renting doesn't really offer much of a return: after mortgage interest, agency fees and tax, we'd be making around £75 per week, which won't really cover redecoration costs on our return.

But it feels odd to sell our house and not have a base in the UK. And we're worried about the housing market running away from us while we're sitting on (equity) cash. But we could easily rent somewhere when we return then be cash buyers when we look for out 'forever' home.

Any thoughts on the benefits (and disadvantages) of renting it out as opposed to selling?

We rent ours out but it is likely that we won't return as it is not a family sized home now and we now have a family .

Cons I can think of to renting out are:

1. Higher insurance cost as you need landlords insurance
2. Higher mortgage as you will most likely have to change to a buy to let mortgage
3. If you do rent out now and sell later there could be capital gains tax implications depending on how long you are out of the UK for - worth taking some advice on before you go as you can plan to mitigate this.

We couldn't have afforded to leave it empty so not an option.

I was in the same dilemma, and decided to rent the house out (tenant will move in in 4 weeks, all being well). The rental income won't be able to cover all the mortage and letting agent costs, but leaving it empty was not an option for us. We bought in the height of the housing market, so for us, it would be prudent to sit it out for a few years before deciding whether to sell

My first reaction is do not loose a foothold in the UK property market!

Second comment is why not sell and purchase a buy to let (smaller/cheaper than current property), that way you retain the foothold in the market.

We live overseas in Middle East and have kept our UK house. We need a base here. With 4 kids and no real family left it would cost a fortune to rent/stay in hotels for the 2 1/2 months we are normally back in the summer and also when we return at Christmas/New Year.

A lot of friends have sold up or rented and many regret it. One friend rented out for a year when she first moved abroad but decided last month to get it back. She only has one DC but it was too much for her having to stay with family and she just wanted a base back. She is very excited that she will get her house back next month and clearly regrets renting it in the first place.

Is renting a room out an option? Then you would get a bit of money coming in and someone to keep an eye on it for you

We rent our house out. We were going to sell, but OH felt sad at the amount of work he put into the house and we are still undecided if we will move back.

I had to sign some forms for the non-resident landlord scheme. Something about tax. I think it is saving us money!

I would be inclined to think, keep the house and when you move back at least you don't have to find another house to rent before you find your final house.

talk to your mortgage provider first - you may not be able to rent it out.

if you know you're returning in a few years, def worth having some kind of property in the uk - even if you sell your house & get a small flat with cash. we have done that & are currently getting a 4% return - better than most savings. if we had to , we could live there short term if we came back to the uk.

there are lots of 'hidden' costs in renting - agency fees, extra insurance, higher mortgage rate (if you can get a mortgage) so work out the maths.

it's hard. we moved to the us just under 2 years ago, as the banks were all going under, trying to make a decision was a nightmare as the financial market changed day by day.

I've rented my house out for two years now, at the time it seemed the best option because of when we bought and the circumstances of our move (we were doing a two year trial and wanted somewhere to return to). We've got it rented for another six months/year and then I will sell. Probably at a loss, because our tenants have done a lot of damage which the deposit will not cover, and I don't think the market has particularly improved. So we'll have to have it completely redecorated (probably including major work in the bathroom and kitchen) with all those costs and then on the market at a low price to sell fast. On the other hand my sister is renting her house at a good profit and it's being well looked after. So it's the luck of the draw I guess(we are paying for an agent to manage the house who visit every month, but apparently during the tenancy there is nothing you can do about damage).

I'd get advice on how quickly and for what price you can sell now, and if that's acceptable to you then sell.

Where are you going to. My dh who is some sort of accountant claims tax back from the Australian government for our rented house. I don't know that much about it but I could find out if you want.

We will probably never live in that house again but it does seem a bit strange to not have anywhere in the UK. My friend here has sold her house in the UK but she can't bring the money over here because of the exchange rate.

I've kept mine - didn't want to lose the foothold in the UK housing market, didn't want to burn bridges, that kind of thing.

My mortgage company allowed me to rent it for a year without changing mortgage but I will have to change it in July to a buy-to-let mortgage.
The insurance changes - but is not any higher as I'm renting unfurnished (so less contents insurance).

Agents are expensive but worth it IME (although I do object to them sucking you in with their percentage rate and neglecting to mention they charge VAT on it as well!)

You need to find out:

would you have problems with CGT if you keep the house - I think not over a short posting but you need to phone the tax office.

can you manage the house yourself from abroad -- I THINK you probably can do this with a homeservice appliance contract and a local handyman number. Saving 5pc management.

predicted price rise in your area ..have you the time to sell up now without rushing?

rental demand and the type of tenant you would be likely to get

Personal view: if you are unlikely to be affected by CGT I wouldn't sell it. I would rent and manage myself. 4000 a year 16000 total is very nice, plus the capital increase. I think it woul dbe a mistake to sell.

Scuse literals and typos.

Well, the sums are that after our mortgage interest, management fee, tax (we've looked in to the overseas/UK tax position), we'd clear around £350 per month. So I suppose over 3-4 year posting that might cover the redecoration cost, assuming we let it constantly. But it is pretty marginal, so the decision comes down to the softer factors, like having a base in the UK and keeping a foot on the property ladder.

Would those of you overseas think it is worth renting it out for that sort of return? Not sure the benefit of buying a smaller place would match the purchasing costs (stamp duty in particular, we'd be paying over 250k to have anything worth renting out).

I really, really wouldn't bother with the management fee. They don't earn it. And I would negotiate with the letting agent -- I don't know if you've been told 10pc but negotiate down to nine or 8.5. And with one fee per let, not an annual re-let fee. You could clear 20000 which is more than redecoration. Tax should be shared with the non earner if house is jointly owned. Is one of you a non earner? Funds should go into the non earners account so there's no interest. Plus you have the gain in equity.

although property prices can go down or up, over 4 years, there's a fair chance they'll go up.

personally, i would pay the fees - my agents have done loads for me, and def saved me more than their costs in air fares, if i had to fly home to sort things out.

btw, i paid under 175k for a 2 bed flat in the SE, fast links to london, so no stamp duty paid. as i said earlier, i'm getting approx 4% return on the investment.

however, we are longer term move (i think) possibly forever!! so different situation & emotional pulls.

Thanks. Will think it over, appreciate your thoughts. Will prob rent it out but might re-think paying a management fee, we've got family nearby who could act as an emergency contact and arrange for work to be done. Can't quite bring myself to sell up, I don't think...

Grumble: tbh in all my years of knowing British expats, not one has said : thank heavens we sold up.. and those who did sell up say I wish we hadn't sold up. Loke at British Gas homecare: for 40 a month (what you might pay anyway) they insure every appliance and teh tenant has a number to phone. ##however the amount you would pay over four years would probably pay for every appliance to be replaced anyway. Worth thinking about though.

Just avoid paying the estate agents a management fee as you will regret it.