the greens

We too are now thinking about renting home in England out when we move to Aus. Have spoken to mortgage lender and they are happy for us to let out but want a fee of £95 for 'letting consent'. We are hoping to find someone we know who will want to rent it. Does anyone know of a sample letting contract that I can have a look at. One that specifies landlords and renters rights and responsibilities. Has anyone else let their properties out without using an agent ? What experiences have you had ? Do you regret not using an agent when problems cropped up ?

sammyg

We rent to 'friends of friends' - although many say this is a bad thing to do we haven't found there to be any problems so far - and obviously this saves us money on a monthly basis as we don't use a letting agent. We have a tenancy agreement which is available from your local council house (or probably downloadable on line) which is all you need as far as i am aware.

We think we will keep it this way until they move on and then use a letting agent when they leave to market it for us etc as we will be in oz by then hopefully.

In answer to when problems crop up - all an agent will do is pick up the phone and call someone in to take a look - in just the same way that you can. So no real difference there and you have control over who gets used if you do it yourself?? which can save you money if you know any tradesmen?

Obviously, this becomes harder if you're on the other side of the world, but maybe you could give your tenants a family number to call when probs arise?

sammyg

Also, forgot to say that if it's your main family home being left in the UK, i would personally be concerned about being priced out of the oz property market.

Prices do seem to be on the up where we are going (Brisbane/GC) and the market where we live now is pretty stagnant - and we live in a 'sought after' family location within the best school catchment in our area...

isgraham

Yes you could be priced out of the market or if you bought your property some time ago and have equity you could refinance to a comfortable level (i.e. a level that rent would cover) in the UK to provide a deposit for an australian property.

Techno Freak

That's what we have just done.

We wondered whether to sell or rent, but decided to rent. Mainly so we can keep a property on the UK ladder, a great pension if we manage to keep it on and over time it will become a very cheap investment. In say ten years, when your mortgage payments are peanuts, you rent will have increased with inflation.

We weren't going to use an agent for all the same reasons mentioned above, but a lot of agents will do one off payments to find you a tenant and do the referencing checks. So, we are paying £500 + vat and they advertise, show people round, do the bank, landlord and credit referencing ( which all costs you money ). To be honest, by the time you have advertised you property and done all those reference checks yourself, it would be a few hundred quid anyway.

As far as test certificates go:-

You HAVE to have a gas safety check done every 12 months - this costs about £40

At the moment, you don't need an electrical safety check - but this coming September you do. BUT just because you don't have to have one, it is highly advisable that you do have one done. If a tenant electrocutes themselves, YOU are liable and they can sue you. If you have a test first and it get certified, they have much less of a case against you as you can prove your wiring and electrics are safe and it was something they had done that caused it.

We had our gas checks done a couple of weeks ago and they were fine, we had the electrics done last week - total nightmare as we need a partial re-wire. But, at least we wont be liable for any mishaps once it's done.

All agents we spoke to said that most tenants want unfurnished, but will expect an oven, washer and fridge freezer. We just left a list of furniture that we were going to leave and when the prospective tenants came round, they ticked whet they wanted. We have a small workshop on the back of the house that we will keep locked, any furniture not wanted will be stored in there in case we need it for a future tenant.

Money-wise, we are in the fortunate position to have plenty of equity in the house. The house is valued at £200,000 and the mortgage was £85,000. We remortgaged to a but-to-let mortgage with the Woolwich and borrowed £120,000. The rental income will cover the interest on this, plus enough to pay for insurances and a bit toward maintenance. We will leave about £5k here to cover times when we may be without a tenant, or repairs and maintenance, and the rest is a nice deposit for Australia - plus we still have a good lump of equity in the house then.

Although at the moment the rent only covers interest only, over time, as the rent increases it becomes much better for you as your mortgage should stay about the same. Our mortgage payments are £625 per month interest only and the house is renting at £750 a month. We rented a similar house before we bought ours about 8 years ago for £450 a month. Based on that, in 8 years time we could reasonably expect a rental income of at least £1000 per month, probably a bit more, but the mortgage should still be £625 ( interest rate dependant ). It may cost us a little, or break even, short term - but down the line it will become an awesome investment. Plus, the house should be increasing in value all the time as well.

As for it being a fall-back, or an easy get out if you don't like Oz, I think that's rubbish. It's nice to know that you still have a house in the UK, but I doubt it would make much difference to us in deciding if we will stay in OZ. You will either like Oz and want to stay, or not like it and want to come home - whether you still have a house ort not. Besides, if you do keep your house, you may not be able to move back into it if you have signed say a 12 month tenancy agreement with someone.

We hope to stay in Australia long enough for our house to be self-financing. Then, if we do return, we would like to try somewhere else in the UK and buy another smaller house instead. That way, we still have a rental property.

As for tax - property tax is a bit different in the UK in that you have to pay it even if you are non-resident. It practical terms though, you probably wont need to pay any for a long time. This is because you already have your tax allowance ( or two tax allowances if the house is in joint names ), plus the interest payments on the mortgage and an amount for agency fees are all offset against your income. So, if your tax code is say 480, you have £4800 tax free allowance per year, ( £400 per month ), and if you interest payments are say £500 per month, that means you would have to be bringing in over £900 per month in rent before you even think about paying tax on it. You will also have to pay tax on it in Australia, not sure exactly how it works yet, but I am sure a similar offset will occur there.

As for capital gains tax - that is complicated, maybe an expert on here can comment. The thing of it is though, that you'll never 'lose' money due to CGT as you only pay tax on increases in value of the house. You are better to keep a house and pay tax on it's profit, than not have a house to make profit on in the first place? ( If you know what I mean ).

Anyway, I've rambled enough - time to get some work done.

Nu-Shooz

We sold our house, but i wish we hadn't now. I would advise to rent it out. You may not like OZ after a while. You can go back home then to your old house.
If you sell it, then going back would be a problem. It's a kind of protection/investment

Up to you end of day.

DunRoaminTheUK

I think there's also the view that the letting agency that you use to manage your property whilst you are living here in Australia will well and truly f**k you over as ours did when we went to live in France for a while.

mad.chef

Hi there
we are keeping our house in the uk,my wifes brother is going to rent it from us as he lives at home and wants to have a nice place.if he rented some other place he would be paying a lot more like £600+ per month plus bills.
we are only going to charge him what our house costs us with full cover insurance and british gas cover so he is getting a good deal.Then we are going to rent in perth until we want to buy, who knows when? we might stay in australia or we might come back ?? who knows.we are not going for a better life we are going for a change of life and to have some fun and adventures.
Dave

Emmanuel20

Just reading this and the many interesting replies.

My girlfriend and I are moving to Melbourne in October and we have been pondering the same question since we received our residencies at the end of last year.

I agree though with the many home owners on here who all comment that in hindsight, keeping their property was the right choice and many of those who have sold, wished they hadn't.

I totally agree with Pookster in that if you have your money tied up in property your less likely to spend/blow it. If anything your more keen to ensure (not at the expense of enjoying your initial arrival in Oz though) that you keep the funds topped up by getting a job relatively soon so
A.) You don't spend the money you have available.
B.) in case you need to send money home in case of a small emergency (plumbing a months mortgage etc.)

I also think that owning a property in the U.K whilst you could consider it to be a bolt hole if things go wrong, initially at least I think this shouldn't be assumed. As if you were to return to the UK you would (hopefully) find that your property has a tenant paying your mortgage and you'll be more likely to rent unless it's planned and you give notice coinciding with you arrival.

I think to assume the property as an investment is your best bet. Over 300,000 britons own second homes in France, what's the difference with Oz/UK apart from the distance?
As a landlord with 5 properties I plan on keeping them all and using them as security and equity if and when I see fit.
All my dealings with agents are conducted over the phone or email, so at least if an emergency does arise (once in a while) as long as you reguarly check your email account there shouldn't be a problem with authorising anything.

My personal approach is to rent initially, if there are unforseen issues that cause stress/cost i'll re-assess and take action.

Hope this helps.