Runnickyrun

Hi there

I am wondering what all your views are on keeping a house in U.K. For the long term (two years plus) and rent/buy something in New Zealand.

Have you all bought a home in NZ and how soon after arriving did you do it? I'm not keen on burning bridges and also know our house is a sound investment and reluctant to sell up too quickly for that reason. We are looking at moving to the Auckland area but prices are high (even compared to us in Hampshire) and the mortgage rate is heftier than here, too. We are looking to fix our mortgage at less than 2 % before rates rise here. We have about £300k equity in our house so we would still need a mortgage in NZ unless we end up somewhere a lot cheaper than Auckland.

We would think about renting for the short term (one to two years until we got residency - looking at about $30k/yr rent on a 3/4 bed) in the Auckland suburbs (looking at Browns Bay and further north)

Our mortgage here is about £500/mth and we could rent the house out for about £1400/mth.

What did you do?

Stuck in Auckland

Keep the house, plow the positive 900 into reducing further your debt

Rent for minimum 12 months - Auckland property changing so great time to rent and benchmark/evaluate.

North Shore already 2% down

Election year, 27% recent poll want housing policies so likely some assistance for first (in NZ) buyers.

Build quality is low, so building your own could or should be consideration if you want to establish roots. This helps with lower deposit:

Land 20% deposit borrow 80%
Building cost 0% deposit borrow 100%

Expect land to get cheaper with downturn and increase supply coming to market. Downturn will no doubt free up builders and lower build costs

An estate agent quizzed at BBQ quoted 36% of their clients were mainland Chinese making over 80% of the $ value of business. That has disappeared now that Chinese government have restricted overseas property spend to 0% - meaning no funds can be taken out to be used on property - for deposit or for repayments/servicing.

MrsFychan

Runnickyrun - please make sure you are aware of your tax obligations in UK as well as in NZ with keeping the property and also you need to make sure that the mortgage company agree that you can do that, it maybe that they will change you interest rate and you would have to declare that you are a landlord for tax purposes in the UK.
A rental agent should be able to give you upto date information on this, law changed last year on owning in UK but living out of the country.

patpending

Hi, I wonder if you could expand on your comment? We are due to go to NZ in June 2017 and have not managed to sell our house here in the U.K. Our only option is to rent the house out. Could you elaborate on the tax implications and capital gains if any ( this is our main private residence). Many thanks.

escapedtonz

We kept our uk home for 3 and a half years and rented it out before selling up.
We tried to sell before the big move but had it advertised at the wrong time of year so couldn't get sufficient interest or a high enough offer.
The month before we migrated we remortgaged to interest only, arranged a rental manager and landlords insurance. The first year we went with a guaranteed rental scheme so we received the monthly rent (less 10% management fee + VAT) regardless whether it was tenanted or not to give us the income security. After the first year we went to just fully managed as the family renting wanted a longer term which gave us security. We were making maybe £250 a month so we were happy but it meant we had to rent here.
After 3 years we'd had enough so offered it to the tenant who initially declined but wanted to extend the rental term. We declined, served them a long notice saying they could stay until sold and placed the house on the market....the tenant bought it a month later!!!
Yes you should inform your mortgage company as you should have a buy to let mortgage when renting out. We didn't as it would have cost too much per month as we couldn't have an interest only buy to let mortgage at the time. We took the risk and it worked out. Not recommended but the other option didn't work for us at the time.
We also applied to HMRC to have our rent paid free from income tax which was pretty easy so we didn't ever pay any tax on that rental income 995 per month less 10%+VAT.
The only pain in the arse was having to submit an annual UK tax return each year.
Sold it October 2015 and used the equity to buy a section and build. We've been moved in 5 weeks now and loving it after renting for 5 years.

patpending

Thankyou so much for replying! So when you sold your house did Hmrc want any capital gains tax?

escapedtonz

No. It was previously our home and we'd owned it for 8 years so I'd guess we wouldn't be liable to pay CGT, however there was no capital gain anyway. We sold 2 houses at the peak and bought that one and later sold for 25k less.

patpending

Hi there,

Thank you...gosh I bet that was tough! I had recently heard that HMRC give a period of grace of 18months...but I cant find any where that confirms this. We really want to sell first but its looking less likely...double whammy with the £ being so weak at the mo!

We also can't decide if to buy a house straight away and take the hit on the exchange rate or to sit it out for a while and hope the NZ/Tauranga market starts to bottom out. Do you have any thoughts on this particularly for Tauranga? Property is just so expensive and we cant decide wether to pay more for location or more for a house...it seems that both do not go together!

escapedtonz

Nah it was ok. We hadn't spent anything on it in 8 years and we did earn £200/£250 rental profit a month for 3 years. Yes we sold for £25k less than we bought it for which was a hard pill to swallow but that's just because nobody ever wants to take a loss. Ok with it now. We also made a bit on the exchange rate by waiting for it to rise. A risky thing to do but it worked for us. Didn't go up by much, maybe only 20/30c but when you're exchanging over £100k it matters.

I'd advise you not to buy straight away. You have no idea which places are suitable or which places you like or don't like or which places to steer clear of. You only get to learn that by living here.

The rental and property market is just gonna keep getting stronger here as Aucklanders escape the rat race and the astronomical prices there. Over 50% of the buyers in Tauranga are Aucklanders cashing in and it's pricing locals out of the market and forcing youngsters to rent as they simply can't compete even on the cheapest of properties. The average house price here now is over $600k. It was maybe $450k when we arrived here 2+ years ago after 2.5 years in Wellington.
If you have kids that will dictate where you live for the school zoning. If not then it's all about location.

Runnickyrun

Thank you all for your helpful comments.
From what I've heard the UK government now charge capital gains tax unless you have been out of the country for 5 years or more. I guess too, that my husband and I would both have to do UK online tax self assessments for the house rental amount once in NZ, but still would have a personal allowance of £11k (I think that's what it is now) each, so shouldn't need to pay income tax.

MrsFychan

firstly you can't just decide you want to rent out the property, you need permission from the mortgage company and they may change the mortgage to reflect that.
take a look at the link on here: https://www.gov.uk/search?q=non+resident

patpending

msny thanks for your reply. We are fortunate enough to be mortgage free. What we are looking for is clarification on the tax position if/when we sell the house together with the tax position in the rental income.

Runnickyrun

Take a look at this link as well as the former one
http://www.expertsforexpats.com/non-resident-tax-calculators/non-resident-income-tax-calculator-2016-17/

kakapo

I do not think you are able to complete UK online self-assessments as non-resident landlords but instead have to complete paper versions. At least this has been the case for us.

In NZ you do not have to declare UK rental income for the first 3 or 4 years, cannot remember which.

Runnickyrun

https://www.gov.uk/tax-foreign-income/residence
This might help.