amlangford

Hi all,

Ive been a happy resident in Vancouver for 2 years now. I own a house in the UK that I previously lived in, I've been renting the house out since we left the UK and plan to continue doing so.

My current UK mortgage lender has so far allowed me to rent the house on a "residental mortage rate", but this is coming to an end. They will no longer let me continue to let the property, telling me I have to go a different lender if I want to carry on letting the house.

After a bit of research, two things are becoming apparent. If I want to continue letting the house, I'll have to take out a buy to let mortage, which means a much higher rate. Secondly, I'll struggle to find a lender to remortage to given my being a canadian (i.e. non british) resident.

I could of course tell a white lie and say Im no longer renting the house. The bank get their money..my happy tenants stay happy...and I'm spared a headache...provided I dont end up getting dinged for fraud

I wondered if anyone else has been in this situation and may have advice??

Thanks,

Adrian

Alphawolf

Hi Adrian,

We are moving in 9 weeks to Alberta and have a similar problem, our house is not going to sell unless we give it away so that isn't an option, we are currently on a tracker mortgage and have been told the same as you that we need to take out a buy-to-let mortgage to rent which I don't get as it is a higher interest rate.
The way it is looking at the moment that monthly repayment is more than the house is valued at rentwise, how is that right???
Anyway if you get any answers I'd be interested to know the outcome

JB0591

Hello Adrian

I was wondering which mortgage provider you are with? We are with Santander and paid for the privilege (£300 ish) of adding a rental clause onto the mortgage but our fixed rate comes to an end in Nov.

Cheers

JB

amlangford

Hi mags1972

Yes, its a very annoying situation. Like you, we are actually at a loss from renting our house, when youy take the management fees into account...and that's on a rate of 3.89%. If we're forced to take out a buy to let, we'll likely be on around 7%, and thus even more loss. We're being tainted with the same brush as the people who rent properties for a living ... At this stage Im stuck. I'm contacting an IFA for advice, ill keep you posted

amlangford

hey John, funny to see you reply. how's it going?

Were mortaged with britannia building society. I spoke to nationwide yesterday and they wouldnt touch us, a) because is classed as "buy to let", technically, I didnt "buy it to let it", I bought it to live in it, and now I want to let it...and b) because were non UK residents.

Ill call Santander to se if they can help us

JAJ

Don't be ridiculous ... you don't have to give it away, you just have to sell it for what it is worth. Which is a figure greater than zero, although perhaps not in line with your aspiration.

PeterF

We've been here almost 4 years and rent our place in Ealing.

Our mortgage is via Nationwide and they now charge us (started in October) an additional 1.5% on the rate.

The big thing for us will be when we come to sell, as we have not lived in it for 3 years of the last 5, we will charged 20% tax (as stands) on any profit on the sale.

Probably be taxed by Canada too.

London Mike

That's an interesting question actually: given the UK/Canada tax treaty would you pay capitol gains in both the UK and Canada?

JonboyE

the capital gain is taxable in the UK if you sell in years four of five after it creases to be your principal residence.

It is taxable in Canada whenever you sell it, but if you have to pay any UK tax you get a credit for it.

lmartin999

+1

I sold my place for less than I paid when I moved back to Canada. The mortgage would have been more than the rental income and the hassle simply didn't seem worth it.

London Mike

Stupid point of clarification maybe, but what about selling in year 6? Is it simply applicable after 3 years after it ceases to be your principal residence ...?

BumbleBeeUK

Guide on whether you need to pay tax on your property sale:

http://www.direct.gov.uk/en/MoneyTax...ome/DG_4016337

incase it helps

PeterF

As far as the capital gains is concerned, you can only get around it if you are sent to work elsewhere by your employers, civil servants abroad etc.

If you choose to live abroad, you have to pay, even if you do not buy another property abroad.

Seems unfair, but thems the rules.

G77

Crap, didn't realize till reading this thread that after 3 years you're liable for CGT in the UK. Currently renting out our house, but our 3 years will be up in September - so guess we should look to get rid before then...

JonboyE

It seems that HMRC give up after 5 years. Normally capital gains on real property are taxed in the country where they are situated but this seems to be HMRC policy.

See this thread http://britishexpats.com/forum/showthread.php?t=485104.

Is is not a big deal. You can keep it for another two years. If you do sell in the interim you don't pay tax twice - you deducted any UK tax paid from your Canadian liability.