angelman

I am sure many of you do this. I have a flat in London which I have been renting a friend.. or rather 'allowing a friend to live in and give me a small gift every month'.
Anyway she is paying so little its getting silly so I have decided to go legit and get an agent. Of course it's quite a nightmare or at leat the possibilities of it being a nightmare are very real. Being so far away and completely at the mercy of the agent to deal with problems is scary. Even doing things like getting my furniture out seems incredibly difficult. Hoepfully I can rent it out fully furnished maybe.
Does anyone have experience of this, things to watch out for with agents etc.
Just dealing with banks, mortgages etc. whilst abroad is enough of a hassle let alone my house!
I had a handyman go in and fix a few things, I have no idea if he is fleecing me, how good a job he has done or anything. I can only hope and pray and go on his good reputation.

For the record the property is in Highbury and I am looking at using HotBlack Desiato who are charging 8% of rent as a fee with another 5% for it to be fully managed..

Longy

Yep I do this, just round the corner from in fact, and I find it painless. You are paying them to manage it and its their job to worry about all these things. I get an email every month saying how much they are paying me, and for an average month that is it. Every now and again I get an email saying that something else needs sorting out and they get it sorted. It may be that it could be a bit cheaper to get these things done myself, but its a lot easier to just let them sort it out. Whatever the case I imagine you will be getting more money then you are now, so it would definitely be worth it.

Its a bit less commision then I am paying as well.

One other thing to consider, and I'm not sure how long you have been in the US, but if you are not going to return to the UK for a while and think you may sell the flat at some point you should make sure you are aware of the capital gains situation which kicks in after a few years.

angelman

thanks for the info...
I did rent a flat before and had a terrible time with the agents... One of the larger national ones. Totally hopeless and made you wonder what on earth you were paying them for. Hence my reticence.
I am aware of the capital gains which is kicking in this year. It's tapered though so Unless I sell some time in the future I hope its not going to be a dramatic impact.
The ideal situation would be for me to sell the flat, buy something smaller to rent out to cover my remaining mortgage and bring the spare cash over here especially given the exchange rate. Then i could buyhere too.. however this is hard to do emotionally and if I do go back I would stuck with a tiny crappy flat instead of the nice one I have now.
I am thinking that if the renting goes well I may remortage and use the extra cash for the deposit here which is a tiny bit riskier but I get to have my cake and eat it!

Longy

I am with a local estate agents, and they seem to be in complete control of it. However my situation is similar to yours and I am at the point where I know I am going to be here for a few years and would like to buy - getting tax back on mortgage interest means buying makes so much sense.

The only way I am going to get a sizeable deposit together is to sell my place in London. The market is pretty good in London at the moment, and the exchange rate is obviously strong too. As capital gains will kick in, in a year or so's time I have decided that now is the time to sell.

The other thing is it will clear everything from the UK and make my tax situation a lot less complex - that has been one of the biggest headaches I have had since being here.

angelman

i know what you mean.. it makes sense. Though I am really loathe to totally sell up in the UK. I think London really represents a very strong market, better than anywhere in the US. It may not have the growth potential of the US but it will remain strong through thick and thin I think, there is just so much demand and so little supply. I would hate to have to get back on the housing ladder there.
Do you write off your UK mortgage interest on your taxes here, I do. Works out nicely. Plus I make sure to deduct all repairs and expenses incurred on the rental property from the rental income. It's going to be a bit of a bummer paying double tax though when I start to earn real rental income from the property. I think this will happen since I earn over the $80K threshold.

Bob

My mother ain't an in the same position as she's still in the UK...use to use agents, but recently tried going back to using one, anyway, tad pricey on cost, and agent required so much to get the house ready, as in a new kitchen, replace the carpet in the whole house - my mother had just replaced the carpet downstairs, the upstairs was in good shape....so with all those other costs, she decided to sod them and let on her own.

But, with all that rubbish done, you'd be able to charge more rent, if your in a good location with competition at least...and agent comes in handy if you end up with a munter in your gaff as they are responsible for getting rid of them...

admaust

Sorry to hi-jack the thread a bit; but we're in a similiar situation: live in America, but still have rental property in Essex. It's been the biggest headache trying to figure out how to file our taxes this year (my wife just immigrated in 2006 so this is the first year for us to file jointly with the rental property as income). None of the descriptions of "foreign income" or forms seem to fit. And it doesn't quite seem right to get taxed twice on the property.

What IRS forms do you use for reporting the income from your rental property?

Thanks!

penguinsix

One thing we had to do when we rented (our US place) was increase the amount of insurance we had on the house. Renters and homeowners are not viewed the same in the eyes of the insurance company (i.e. risk levels) and there is a greater need for 'visitor liability' should the renter fall down and go boom.

We also made it clear that renters get 'tennant insurance'. This isn't so much to protect them, but as to protect ourselves (tenant starts fire, burns down neighborhood--guess who gets sued).

Of course, UK and US liability law are nowhere near the same, but I thought I should mention this as it might be something you want to look into before going down the tennancy path.

and yes, it did cost us a little more every month...

Martin Brown

Hoepfully I can rent it out fully furnished maybe.

Be careful here. If you rent it out fully furnished the furniture needs to comply with furniture regulations, which it probably won't unless all the furniture is quite new. If you do it anyway and have a problem at the flat, like a fire, you could be in all sorts of trouble. I would think about letting it unfurnished. Moreover, if you leave stuff like fridges, cookers etc and they break down -you have to replace them. Pretty much the only benefit of renting it furnished is the small write-down costs for depreciation of furniture

Martin Brown

[QUOTE=angelman;4554151]I am sure many of you do this. I have a flat in London which I have been renting a friend.. or rather 'allowing a friend to live in and give me a small gift every month'.
Anyway she is paying so little its getting silly so I have decided to go legit and get an agent. Of course it's quite a nightmare or at leat the possibilities of it being a nightmare are very real. Being so far away and completely at the mercy of the agent to deal with problems is scary.

One other thing to consider is, if it is a flat, then you need to look at your lease to see if you need permission from the landlord to rent. You're renting it already so you may have addressed this. You should also consider, if you have a mortgage, the fact that you should tell your mortgagees. Finally, if you are renting and haven't told your landlord then you should at least look at your insurance policy to make sure that renting it doesn't vitiate your policy. Beware because a lot of insurers won't hold you covered if you are renting the property out to certain types of tenant. If I were you I'd write a letter to the insurers, telling them you're renting, to cover your arse in case of a problem.

Tootsie Frickensprinkles

As far as the furnished/unfurnished question goes. I found it best to go with what they described as semi furnished.

If you don't want to get rid of your main items of furniture it saves on storage costs and my agent warned me (rightly or wrongly) that having tennants in your house with their own stuff was harder to deal with in the eventuality of having to boot them out. However, if you have stuff you coudn't bear to be ruined at any cost, then obviousy you must remove it.

I kept a very basic contents insurance on my place as even the cost of replacing the carpets or wood flooring was worth the 8 quid a month they charge me, so a bit more stuff made no difference.

Short term lease takers generally speaking dont have their own kit .. especially white goods so, depending on your location and property type, you have more of a market open to you.

However, fully furnished can be an arse when replacing broken goods etc is concerned and dealing with inventory costs and complications. In the end, I removed everything except white goods, bedroom furniture, dining table and the 3 piece suit. Other than fitting a battery fire alarm, I had no elec, gas or fire issues with my certificates. Costs about 200 quid to get all that sorted. Your agent can and should arrange it for you.

I use a local chain estate agent, the second one I tried. I'm now on fully managed for 12.5%. The first one never even got a tennent in and since I changed agents, I've had 3 weeks without rent in the last 3 years. Although it hasnt been without its issues, fortunately I was back from VA in 2005 when I had to deal with the problem (just kept security deposit to solve). I was managing myself then though.

If you have no mortgage now, and wanted to remortgage, I am sure you will be forced to take buy-to-let terms, conditions and rates. Permission from your lender if you are under a mortgage might take some time, I waited over two months for a decision even though it seems to be not much more than a technicality. If required, same goes with your landlord. Changing my insurance policies was easy once all that was sorted.

Generally speaking however, I dont find it that much of a nightmare, the key as you already said is getting a good agent.

Hank Hill

I'm going to be buying a house in the UK at the end of the year. How do you go about paying the tax on the rental income then? If you pay the UK tax do you have to pay US too? or can you write it off this side?

cheers

BritGuyTN

if you have no plans about returning to the Ukn and have some equity I would definitely sell up and invest over here. if you live in a suitable area the returns on residential investment property can be a lot higher than in the UK

Bob

plenty of tax threads to search through...but no, won't be double taxed, there's a tax treaty...as long as the income isn't over $80K

angelman

just to confirm.. is the double tax thing as long as the foreign income isnt over 80K or if all your income is over 80K. One would hope the former!