darbydoo

Looking to move to NZ in Jan/Feb and house is currently on the market.

If it sells, and that's a big if, it will be at a loss and I'll need to fund 10-15k shortfall with an unsecured loan.

The more I think of it, it seems a bit of a silly decision. Am I better off renting it out?

Mortgage company are fine with it, but have to request it once a year, which is a bit of a pain. The rent wouldn't cover the mortgage, but the difference is around £100 a month, which is manageable.

What are others' experiences of renting out through an agent? have you had any problems with tenants/ had to pay out loads on maintenance/ repair?

such a hard decision. i guess renting it out does mean that i'll have an asset in years to come though...

MrsFychan

the rules are changing next year in the UK for non resident people renting out their properties, bit of a hurry at the moment but have a google round and see if you can find the new piece of legislation and I will have a look a bit later

darbydoo

Ok, I wasn't aware of this.

Just found something on hmrc HM Revenue & Customs: The Non-resident Landlord Scheme

Might be worth me going to a few letting agents over the weekend to see how they currently operate with overseas landlords.

Thanks

janiejones

Gawd, I just nearly had a panic attack, then followed the link,phew. The status in the link has been the case for a few years, as we had to provide our letting agent with a disclaimer of some sort, and conformation from a branch of HMRC in Liverpool that we were registered as self assessment, and would pay our own tax, which we do. Not sure what the new legislation is, though?

darbydoo

Ok so the agent doesn't deduct it on your behalf? I'm already registered for self assessment as I have a business, so would rather do the tax myself and offset everything possible against it

darbydoo

On a related note, do we still get a tax free allowance in the UK if we live abroad?

jmh

The agent got me to sign a form so that they didn't have to deduct it at source. Yes, you still get your tax free allowance. The IRD has good info on its site about what is tax deductible. I found it pretty easy to do myself.

Keep all your receipts for work you've done since you bought the property - if you do get hit by capital gains tax you can offset it against the expenses you incurred in improving the property.

jmh

Since I sold my house I haven't been following it but it may be the reduction in the time period you can let out the house before you have to pay capital gains tax when you sell it. I think it's coming down from 4 years to 3.

MrsFychan

article I was referring to

Alert: New Tax Attack on British Expats | British Expatriate Community

darbydoo

Thanks. Just been reading up on it. Something to do with reducing the exemption on 3 years to 1.5 years. Hmm why is nothing ever simple?

darbydoo

Ok, have just spoken to UK HMRC.
In case anyone else is in the same boat, here's what you need to do:
- Complete a P85 form (i don't need this as i'm already registered for self-assessment)
- Complete a non-resident landlord scheme form: NRL1i - Non-resident landlord scheme - Application to receive UK rental income without deduction of UK tax - individuals - this means i can do my own self-assessment rather than having the tax deducted by the letting agent. You can offset more against it that way i guess!
- Capital gains tax would then be applicable when I sell it. the rules are changing, as Mrs Fychan has pointed out, but the exact details have yet to be confirmed by the government. Another factor to bear in mind is that they are thinking of abolishing the UK personal allowance for non-residents! They don't miss a trick unfortunately!

Also spoken to my estate agent this morning, was was extremely helpful.
Their fee for managing the property is 10% + VAT - is this reasonable?

They have a rigorous vetting process for tenants and sign up initially for 6 months with a rolling monthly contract thereafter, which i guess is normal.

They don't cover you in the instance of rent default/gaps in tenancies though. Is this standard practice? I guess I can get insurance/ keep some spare money just in case in this instance though?

SSky

We thought about renting our house when we left the UK and decided against it, but in hindsight we actually would have been better keeping it. We just wanted to cut all ties and make a new start but financially it would have made more sense to keep it. Too late now but we have purchased other rental properties here in NZ to compensate now.

MrsFychan

when we looked at renting out ours, long story, there was an option to take out some sort of insurance to cover when it was not rented, obviously you pay for that. Think ask around a couple of rental agents to see what the difference is and what packages they offer