If we decide to rent instead of sell, what do I need to know?

[Itscoldouthere]

Life’s just got more complicated, it looks like our house sale is about to fall through. We are moving abroad for work for 2/3 years, now we are wondering if we should rent the house out and hopefully ride out the predicted price fall in the property market.
We’ve never been landlords so I have no idea what’s involved, we would also be out of the country so would need it to be managed and would need to pay tax in the country we are moving too.
Any advice would be great, I feel like my heads exploding already 🤯😂

Just drop the price until it sells, then you wont have three + years of tax/tenant hassles and headaches, I wouldnt bet on prices bouncing back either as Brexit and the Trade war never went away, they are still there even if this crisis doesn`t last (the jury is still out on that I think) Maybe better to get a half decent price now than a much lower one later?

We were in a similar position, needed to love quickly, didn’t sell in time so rented instead of selling.

Things to think about

Keep money in a separate account and don’t touch it so you have a reserve to fix issues

There will be A LOT of issues.

Get a decent letting agent to manage the property and apply the law correctly. So many landlords don’t know it

Remember you’ll be liable for capital gains tax

Get an accountant to do your tax return. Lots of things you can deduct that aren’t apparently obvious.

Don’t expect to make much money. After 5 years as a LL, we will be doing well to break even. It’s absolutely not a money spinner

Let the property in the state you want it back in. We had carpets professionally cleaned, cleaned the oven and it was absolutely spotless when we let it.

Don’t forget you’ll need to convert to a BTL mortgage or a the very least get permission to let from your lender.

You need landlord insurance.

And a gas safety certificate (letting agent will sort this)

And electric safety soon (next year I think)

And smoke alarms. And CO detectors. (Letting agent can advise)

Good luck!

In your situation, I honestly wouldn't, if it's a home you are expecting to move back into once you return then I wouldn't.

People will not treat your home like you do, or would expect them to do. Also, a lot of people renting will either want a long term tenancy - think 5 years or a short term tenancy, one year. There's not many that want an in between. Therefore it would be a real hassle to get them out if you're moving back, or get them in if you have them moaning all the time.

Interesting reply’s, so a few things for us to consider, we’ve not got a massive mortgage, house is currently (ha ha) worth £950,000. It’s a big house 5 beds with work from home space, in a village, within commuting distance of London, but not fancy Home Counties.
We were going to buy a flat in London (mortgage free) once we’d sold.
We definately wouldn’t want to live in it once we return from abroad, our children have left home and it’s now too big.
We have to pay 55% tax on income where we are going, so not a massive chance to make lots of money.
However feels like taking a low offer now is a bit stupid, we had two offers when it was on the market and we were due exchange at lockdown.
It’s been our family home so I thought we wouldn’t have to pay CGTax?
I haven’t looked at rental prices yet, but it’s obviously not going to be like massive London rental prices.
We would possibly consider a 2/3 year rental.
All sound like a lot of hassle 🤦‍♀️
But currently selling is a hassle too.

You are liable to CGT even if it used to be your primary residence if it is rented out for over 18months, or is it 9 now?

Ok so you say you have a massive mortgage.
Have you got back up money if the tenants fail to pay the rent or if you have a void period.

I said we’ve not got a massive mortgage. We have savings so could pay void periods, but we are also paying out for a rented property abroad, so would obviously hope that we would not be loosing money on our home.

I would try & sell because I'm assuming you have lots of equity ?

My aunt is trying to sell a property put it on before just Brexit, took it off because she wanted a "set" price even though no mortgage & doesn't need the money. Put it back on in March (eek), I doubt she will get her lowest offer now.

Yes lots of equity in our home, we don’t really need a UK home whilst we are away, but it would be strange if we just had the money sitting in the bank.
We’ve always made money on property, so would be a big adjustment in our way of thinking, I know that’s weird but that’s how it’s worked for us. I guess everything’s changed now. Maybe it’s time for us to think differently too.

Maybe put it into a different property? a 5 bed outside of London has a smaller rental market then an flat in central London.

You could buy something at auction?

I have lots of equity but the price of my home in SW London hasn't changed in probs 5 yrs so I think the days of buying for 500k & selling for 700k 2 yrs later are gone in most cases.

@Itscoldouthere You could consider selling and then purchasing the London flat, one that is liveable, so that it can be rented out immediately? You then have your base when you return.

We’ve made money by doing houses up, but they have always been our home, not something we did for business.
We will see if there is any new interest, we’ve been listed as under offer since December last year, so we have no idea if it will generate any interest if it goes back on the market.
Just have to see what happens.
I’m off to read up on capital gains tax.

You need to update the listing immediately as I didn't review anything 'under offer'.

I would rent it out via an estate agent. They often have managed schemes that you can join where they take the hassle out of everything but you pay them a percentage of the rent. Shop around a few local agencies (big brands). A 5 bed in London would be a premium property depending on the area so you could get a lot of interest.

Sorry my mistake misread as you had massive mortgage not got massive mortgage.
Have a look on landlord forums to see what is required,regulations tax etc.Property 118 and Propertytribes are two but there will be others.
Bare in mind the tax situation my change.
They clamped down on BTL several years ago through taxation so it might be in line for more punitive measures in coming budgets with what is happening now

@Shinesweetfreedom thank you for that, I will look them up, it all feels rather daunting. I need to look at the tax situation as we will be paying tax in Canada not UK, so I need to see if they have different rules etc, our standard tax rate is already higher in Canada than here in the UK.
In Canada everyone has to complete a tax return every year, so DH company will do our first tax return for/with us, but we need to find out what the rules are re rental income as it may not make financial sense to rent.

Good luck with whatever you decide to do

Every Council has their own rules.
I do a yearly boiler service £85. Landlord insurance £113 both deductable. Smoke detectors and CO2 are 20 minute job. check batteries twice yearly.
Takes me 10 mins to do online tax returns. No mortgage so no problems with consent.

Tax return takes 10 mins online.

there's plenty of landlord here happy to advise.
or landlordzone forum.

If the house is in the UK then the rental income is taxable in the U.K.
if Canada taxes offshore rental income then you will have to do returns for both.

www.gov.uk/tax-uk-income-live-abroad/rent

The National Landlords Association have online courses and lots of advice. Be aware that changes are coming re; Section 21 and tax. Lots of legal obligations - don't assume the letting agent will take responsibility- the buck will stop with you should anything go wrong.

Personally, in this particular situation, I'd put it back on the market for a lower price and get rid.

I would hold on to it and rent it out. It’s not that tricky to do - get a decent agent and they will do the legwork for you. They will tell you everything you need to know re local authority licence (if applicable), safety checks etc.

To set up my flat to rent cost about £1000-1200 including a hefty LA licence fee and the various safety checks. And of course that’s all offset from any rental income. Presumably given the size & location, you're looking at £1500+ per month rental income, which easily pays for the outgoings, including mortgage.

Tax is pretty simple to sort, especially if you already submit yearly tax returns (and if not, any decent accountant will sort it for you).

But I guess it all boils down to whether you think the market will have recovered when you return from abroad - my feeling is in London / commuter belts, it will have.