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do I rent my house out or not, need answers to these questions if anyone can help

11 replies

gio71 · 10/01/2008 17:16

Hi
Am looking for some advice. I have a house which I am thinking about renting out. My situation is as follows.I live abroad for a lot of the year. I work technically in the UK (freelance for UK company, pay tax in UK, spend requisite tax days in UK etc etc). However whenever I am back in the UK I stay with my parents so they can spend time with me and DS. My sister has been lodging there in my placebut is due to move out so I will have an empty house with me never using it, hence the rental query, My questions are these;

  • when I went on mat leave I changed my mortgage to interest only so could afford to spend more time on mat leave. If I rent it out the expected rental income would cover this mortgage, insurances but wouldnt cover the rental agency fee (I can live with this). What I am wondering is, do I need to change my mortgage to buy to let? Should I change back to repayment variable or stick at interest only (realistically I am only likely to keep hold of property for few more years until market bucks up a bit).

Next question, at the moment I get child benefit, obviously on that address. Am also registered self employed there. Can I keep those addresses even if I have tenants in.
Next- generally is it worth paying the rental agents a monthly management fee?
I really appreciate you taking the time to read this and any advice you can give me
OP posts:
hanaflower · 10/01/2008 17:36

This reply has been deleted

Message withdrawn at poster's request.

itsahardknocklife · 10/01/2008 17:38

As a tenant, I would not be happy at your child benefit and self employment being registered there. Not sure where you stand legally though.
Why would you want to rent it out when that would mean you lose money each month?

gio71 · 10/01/2008 17:42

just because everything I hear about the UK market is negative, nothing shifting etc

OP posts:
LIZS · 10/01/2008 17:49

You wouldn't be able to claim it as your principal private residence if you rented it out. If you declare that you live outside the UK it is still possible to be entitled to UK CB especially if you are a UK taxpayer, but also depends where you are resident. You get income tax relief on certain expenses for renting out, set against the rental income , such as the mortgage interest, maintenance, fees, insurance etc so if you have work to do on it it could be beneficial to do this while it is let. There is a Non Resident Landlords Tax Office in Nottingham if you need info.

If you are only planning this as a temporary measure the mortgage company may agree to keep your mortgage as is but you have to notify them. BTL's tend to be interest only.

1dilemma · 11/01/2008 02:33

Should change to BTL
Should keep at interest only since only that is tax deductable
If you are overseas/parents elderly /not interested management is probably worthwhile is it an old place or brand new? (would expect different levels of problems)
Don't know about self employed bit why not switch CB to parents or sisters place?
Had to laugh about waiting for prop market to pick up a bit, I thought currently we were at an all time high, and headed for a big fall, banks aren't lending and prices are unsustainable, I too question the wisdom of loosing money on this whilst waiting for prices to rise (although I recognise this links you to home)
Alos ig might be the case that if you sell now no CGT since it would be counted as your PPR IYSWIM
(disclaimer 1dilemma wants property market to fall and isn't an accountant so knows nothing about tax)

alipiggie · 11/01/2008 04:44

Renting your property out can be a complete nightmare even with a Property Management company. You can write your expenses off against the income of the rental, but more often than not it's not worth it. If the market is still moving where your property is, test the water.

If not talk to a few property management companies and go that way. Get short-term assured tenants, who if are the "tenants from hell" are easier to get rid of on those kind of agreements. Be prepared for the property not be looked after properly and additional maintenance to be required because of tenants.

Above all you must contact your Mortgage lender, insurance provider and inform them if you intend to let it out as this has an impact on both.

I would also change your registered address in the UK.

Egypt · 11/01/2008 05:12

still, it's always a good idea to have a property in the uk if that is where you want to live at some point in the future. selling it now may mean you find it hard to get back on the ladder, depending on what the market will do of course.

we live abroad and have a property in the uk. it is no hassle to manage yourself, we don't use an agent, except to initially find and vet the tenants and write contract. but ours isn't inner city, doesn't have students in it etc, so that can make a difference. if we were to buy other properties and rent to singles, students, inner city types, i think we would def use an agent. more issues sometimes.

you don't pay tax on the income if you are not resident in the uk

just have to inform mortgage lender and insurance provider about rental. get an insurance to cover you for landlord's building insurance.

OverRated · 11/01/2008 05:21

You would need to check with your lender to see if they want you to change to BTL. Some will give you permission to let the house but remain on the mortgage you already have (for example, if you bought the house and lived in it and intend to live in it again)

You can claim agents fees and various other costs (including wear & tear) on your tax return (you have to be registered as an overseas landlord, like LIZS explained) which makes it easier to cover costs.

Look into landlord insurance - you can get companies who insure the building & against loss of rent.

If you can avoid paying an agent to manage it, I would. But for the sake of convenience and reaasurance, it can be a good idea.

Not sure about being registered at the property for self-employment & benefits. That doesn't sound right to me.

ScienceTeacher · 11/01/2008 06:57

It depends on whether you want to be in the UK property market or not. Are you planning to return to the UK at some point?

We rented out our house when we were abroad, and it was a good job too. While we were away, the house prices doubled and we would not have been able to return without a house to go to.

We were not able to receive CB when we were abroad. It took me a couple of months to inform them of my change of address, and I had to pay back that money. It was very clear.

LIZS · 11/01/2008 09:01

Sorry Egypt that is n't necessarily right. You are liable for tax on the income, either in UK or whereever you are resident(depends on double taxation agreements) but you may well find that the net income (after offsetting mortgage interest, expenses etc against the gross rent) falls below your UK personal allowances so you aren't actually required to pay anyway. If the property is jointly owned you can divide the income and use against separate allowances.

Egypt · 11/01/2008 09:27

ok sorry

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