Pros and Cons of renting out our home

[grumblegrumble]

We're going overseas for 3-4 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 lived overseas for 7 years.We only had one child when we left and we wanted her to be part of a community so we decided to rent our house out with english country cottages.We returned home every summer for 6-8 weeks and my dh often returned for meetings in the uk.We had 3 more kids overseas - so we were very glad we kept the house as staying with relatives is well nigh impossible with 4 dc's.However we always knew we wanted to keep this house as we would never be able to get a house like this again.You have to think about your personal situation and what will suit you in the future.

Thanks. If by renting we'd make big capital repayments too, we'd be more willing to take on the possible hassle of having tenants. But it seems we'd be renting it out purely to cover the interest and costs, on a house which is lovely, but which we had planned to move on from anyway, in the next few years.

But it's just getting my head around not owning our own home for a while.

I think it depends how often you would be coming back to the UK and how long for. If you would be staying eg for a couple of weeks at a time then yes I think your own home is a better (and cheaper) option than paying to stay somewhere or putting friends and family out for that length of time. if you would only be coming back for weekends its a bit different.

No back very often - maybe a fortnight once per year, then the odd weekend/few days in school hols. So staying with family or renting a place for a couple of weeks wouldn't be prohibitive. Keeping the house for our use doesn't really justify itself. it would just be a security thing/luxury to have our own house to stay in.

Depending on number of rooms and number of visits per annum you could do a hybrid of 1 and 2 by renting out a room so someone is there but you have access to the rest when you come back. Wouldn't appeal to all renters but if the rent wan't bad and they had the run of the house most of the year that could work.

That is a good idea. Thanks. [lightbulb moment...]

Will think a bit about that.

i am pretty cautious by nature and if it were me, i would rent it out because

cant get caught out by rising property market ( i would be gutted if i sold for say £300000 and then had to pay £375000 in 4 years time when i could have saved this just by holding onto it.

would have somewhere to come back to if it didnt work out abroad.

you could always do somewhere in between- ie rent it for a year and see how you feel then- you might get good tenants who are happy to stay on.

Thanks. That's what I'm worried about, so servicing even just the mortgage interst gives us security. My worry is bad tenants ad it being expensive to redecorate and make good.

We have been ex pats in Texas for nearly 4 yrs and we rented out our property initially. It is hard to make a great deal of profit when it is fully managed and servicing a mortgage, but we thought it was worth it. Most ex pats here tend to rent out theor family home so there is a base if you intend to return. We have gone against the curve because we will be returning back later this year (Texan life not for me really) and we have sold it. We had another baby while abroad, so the house was just too small and we needed a step up and into better catchment areas/ less urban neighbourhood. There are tax issues around this (hence why a lot of people hold on to it) but in our case, we had made a good profit over the 4 yrs we owned it, but not enough to trigger punitive capital gains tax.
It is a complex issue, selling while abroad. But renting out will at least give some security that you have a base, the mortgage is covered etc.... If we had sold a while ago when the market was better, we'd have made a little more - but that being said, we atill got a very good price. BUYING while abroad is the headache. Personally I would rent it out - less hassle.

We returned to the UK last year after 3 years abroad. We rented our house out whilst we were away. We didn't want to sell because of catchment areas, friends and family etc. For us it has worked out really well renting out. We've been able to afford to do the house up due to the profit we made from renting, and the children have got back into their old schools.

I think you should sell if you can get a buyer as once interest rates rise you will get a good return whereas house prices are very likely to fall sharply in the next couple of years if you look at the rest of the economy.

We have been abroad for 4 years and rented the house out. We have an excellent letting agent who deals with the snags for us, and the rent goes back into the house by way of repairs and upgrades.

I intend to return to the house once dh is posted back to the UK. It was my forever house when we bought it in 1992, and I want to live there again.

We also didn't sell, as dh is HM Forces and so we didn't know when we would be going back. This way we stay on the UK property ladder with a house we like and only another 10 years on the mortgage.

There is tax planning you can do - some of the costs of redecoration can be set off against the income tax you pay on the rental income (and mortgage too). And presumably as you'd be abroad it would not be a huge amount of income tax you'd be paying anyway? There are always doom and gloomers about house prices... they are yet to be proved right.

You also don't pay tax on the proportion of the rent paid by the tenant which is needed to pay the interest on your mortgage and there are various other tax deductible expenses eg not paying tax on the proportion of rent which is used to pay agent fees / repairs for wear and tear etc. It would be worth getting some proper advice so you know exactly what position you'd be in.

Also, if Noddy is right and house prices will plummet you'll still have the asset which can still be sold and buy you the same sort of thing as it would now (all house prices would go down)

I would definitely keep it if there is any possibility you may be out of the UK for any longer than 3 or 4 years. I know people who have not been able to get back onto the ladder or had to buy something a lot smaller than what they sold because the UK property market is still much more volatile than most other places

I don't think its doom and gloom When prices fell before the only thing which re ignited things was ridiculous interest rates and quantative easing All economists agree that if it had been left and not 'propped' up then 30-50% down would not have been unheard of.Obviously if you have no mortgage and there is no risk of negative equity you could keep it and sell later or live in it but if its about money release now is as good a time as any.