Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

would you rent out or sell UK house?

would you rent out or sell UK house?

Old May 25th 2012, 3:28 am
  #1  
Forum Regular
Thread Starter
 
Joined: Jun 2011
Posts: 136
LillyRobeson is on a distinguished road
Default would you rent out or sell UK house?

We put our house in outer London on rental market. It looks like we could get 1450 pcm. Our mortgage and insurance is 1100 and the property management company would get another 150. This leaves 200 pound extra some of which we would need to put aside for repairs and maintenance - and in case we have a period with no tenant as well.

The estate agent asked us if we'd consider selling as they had an interested client. The buyer came and saw our house and has put in an offer a bit above market levels as he wants us to leave everything (from beds down to kids' trampoline in the garden). Once we take into account all the money we've spent renovating and all the costs involved in buying/selling, we're still left with a 20,000 pound profit on what we paid 3 years ago for the house so I guess in today's market that's not too bad.

I'm tempted to sell. We're not going to buy yet in the US - not for another 4 years at least for various reasons - so we could shut the money away in a savings account for 4 years and get 4% interest pa. I think that a) that's better than what we'd get from renting where we're really just breaking even and b) house prices are unlikely to increase by that much over the next 4 years. And also, to be honest, I don't like the uncertainty of tenants. You can have great tenants but if we have shitty ones and we're over in the US, we're at the mercy of the property management people.

Any thoughts??? WWYD?
LillyRobeson is offline  
Old May 25th 2012, 6:19 am
  #2  
BE Forum Addict
 
rebs's Avatar
 
Joined: Nov 2007
Location: Beautiful Dorset, UK
Posts: 2,178
rebs has a reputation beyond reputerebs has a reputation beyond reputerebs has a reputation beyond reputerebs has a reputation beyond reputerebs has a reputation beyond reputerebs has a reputation beyond reputerebs has a reputation beyond reputerebs has a reputation beyond reputerebs has a reputation beyond reputerebs has a reputation beyond reputerebs has a reputation beyond repute
Default Re: would you rent out or sell UK house?

Originally Posted by LillyRobeson View Post
We put our house in outer London on rental market. It looks like we could get 1450 pcm. Our mortgage and insurance is 1100 and the property management company would get another 150. This leaves 200 pound extra some of which we would need to put aside for repairs and maintenance - and in case we have a period with no tenant as well.

The estate agent asked us if we'd consider selling as they had an interested client. The buyer came and saw our house and has put in an offer a bit above market levels as he wants us to leave everything (from beds down to kids' trampoline in the garden). Once we take into account all the money we've spent renovating and all the costs involved in buying/selling, we're still left with a 20,000 pound profit on what we paid 3 years ago for the house so I guess in today's market that's not too bad.

I'm tempted to sell. We're not going to buy yet in the US - not for another 4 years at least for various reasons - so we could shut the money away in a savings account for 4 years and get 4% interest pa. I think that a) that's better than what we'd get from renting where we're really just breaking even and b) house prices are unlikely to increase by that much over the next 4 years. And also, to be honest, I don't like the uncertainty of tenants. You can have great tenants but if we have shitty ones and we're over in the US, we're at the mercy of the property management people.

Any thoughts??? WWYD?
That's a difficult dilemma...

When we moved over to the US, at first I was adamant that we should sell our house and just be done with it - not have the hassle of renting/tenants/repairs etc.

However, in the end we did keep it and rent it out, and with hindsight, I'm glad we did.

We only stayed for 2 years in the US (company transfer), and having our house to return to really made the move back to the UK pretty much stress free.

For us, that alone made it worth any issues or niggles we had with out tenants - including a chunk of unpaid rent We also had to subsidise our mortgage from our US income to start with before interest rates dropped at which point we just about broke even.

Having said that, it's a house we love and in a location where we are more than happy to be, so that was a factor in our decision.
rebs is offline  
Old May 25th 2012, 7:28 am
  #3  
BE Forum Addict
 
Joined: Mar 2008
Location: Santa Cruz, CA
Posts: 4,896
md95065 has a reputation beyond reputemd95065 has a reputation beyond reputemd95065 has a reputation beyond reputemd95065 has a reputation beyond reputemd95065 has a reputation beyond reputemd95065 has a reputation beyond reputemd95065 has a reputation beyond reputemd95065 has a reputation beyond reputemd95065 has a reputation beyond reputemd95065 has a reputation beyond reputemd95065 has a reputation beyond repute
Default Re: would you rent out or sell UK house?

I think the big question is how likely is it that you might want to return to the UK within the next 3 or 4 years. If you are pretty certain that you will never want to live in that house in the UK again then you might as well sell it now and invest the cash.

I rented my house in the UK for about 3 years before I sold it and, even though I didn't have any problems with the tenants it really wasn't worth the trouble - and when I wanted to buy in the US I needed to sell the UK property in a hurry at a time when the UK market was particularly bad.
md95065 is offline  
Old May 25th 2012, 10:07 am
  #4  
SUPER MODERATOR
 
christmasoompa's Avatar
 
Joined: Oct 2007
Location: In a darkened room somewhere.............
Posts: 29,815
christmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond repute
Default Re: would you rent out or sell UK house?

Personally I'd rent it, you say you'd get a £20k profit, but if they're buying all the contents as well wouldn't they cost you more than £20k to replace anyway? So it wouldn't be a true profit anyway.

Unless of course you've already taken in to account the value of the contents and taken that off the profit, but even so £20k profit in 3 years is pretty low for London - I know the market hasn't been great recently but London has performed better than most areas.

So I'd hang on to it if I were you, jmo though.

Good luck whatever you decide.
christmasoompa is offline  
Old May 25th 2012, 12:02 pm
  #5  
BE Forum Addict
 
SarahG's Avatar
 
Joined: Apr 2007
Location: Charleston, SC
Posts: 1,454
SarahG has a reputation beyond reputeSarahG has a reputation beyond reputeSarahG has a reputation beyond reputeSarahG has a reputation beyond reputeSarahG has a reputation beyond reputeSarahG has a reputation beyond reputeSarahG has a reputation beyond reputeSarahG has a reputation beyond reputeSarahG has a reputation beyond reputeSarahG has a reputation beyond reputeSarahG has a reputation beyond repute
Default Re: would you rent out or sell UK house?

We are renting out our house in the UK. We won't sell it until we have green cards in our hands. Rental payments cover, just, the mortgage. Luckily we have had no problems getting tenants in. After the last one moved out we got another on in within 5 days.
SarahG is offline  
Old May 25th 2012, 2:13 pm
  #6  
cxx
BE Enthusiast
 
Joined: Jan 2011
Posts: 505
cxx has a reputation beyond reputecxx has a reputation beyond reputecxx has a reputation beyond reputecxx has a reputation beyond reputecxx has a reputation beyond reputecxx has a reputation beyond reputecxx has a reputation beyond reputecxx has a reputation beyond reputecxx has a reputation beyond reputecxx has a reputation beyond reputecxx has a reputation beyond repute
Default Re: would you rent out or sell UK house?

When we moved to the US we sold our house because we didn't want the hassle of tenants and we didn't love the house / area. Friends who had rented previously said that when they returned the house didn't feel like theirs anymore - the tenants had redecorated, etc. - so they sold and found new places.
cxx is offline  
Old May 25th 2012, 2:26 pm
  #7  
Forum Regular
 
Chrisdc's Avatar
 
Joined: Sep 2002
Location: Los Angeles
Posts: 277
Chrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond repute
Default Re: would you rent out or sell UK house?

I would ask a CPA for some advice before you make a decision. There are a tax implications that could actually tip the scales one way or the other. When I rented out my apartment in the UK I declared the income on my US tax return, but was able to deduct the mortgage interest. You can also deduct trips to inspect the property as business trips etc...

But then I also had to pay US tax on the profits from the sale when I sold the house.
Chrisdc is offline  
Old May 25th 2012, 2:32 pm
  #8  
Forum Regular
 
Joined: Jun 2011
Posts: 157
Egon has much to be proud ofEgon has much to be proud ofEgon has much to be proud ofEgon has much to be proud ofEgon has much to be proud ofEgon has much to be proud ofEgon has much to be proud ofEgon has much to be proud ofEgon has much to be proud ofEgon has much to be proud ofEgon has much to be proud of
Default Re: would you rent out or sell UK house?

I'd sell it and let people in the UK get on the property ladder if I'm not living there.
Egon is offline  
Old May 25th 2012, 2:38 pm
  #9  
Rootbeeraholic
 
Joined: Aug 2009
Location: Houston, Tx
Posts: 2,280
Bink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond repute
Default Re: would you rent out or sell UK house?

I assume that you're taking more than 20k equity out of it and that that is only the profit.
Assuming this is the case, I'd sell, put the money into savings and earn interest on it.

Tennants are a pain, even the good ones. You'll have to replace all the furniture within 4 years if you rent it furnished, you'll probably have to replace carpets too, and re-paint plus any additional repairs to things like boilers (in addition to annual service to boiler which is a requirement when you have tennants).

The only reason I would rent is if you really want to move back into that house and you think you'll only be gone a year or two. Also be aware that it's a real pita trying to sell a UK house from the US. Timezone issues, paperwork issues, it's not much fun.

EDIT: Also be aware that if you sell it when you're filing US taxes there's a 2 out of 5 year rule to avoid paying tax on the profit (as long as it's less than $250k profit).
Also read into UK tax rules as there's relief from capital gains tax if you sell within a set period (even if it's rented out) if you move abroad. I believe it's 3 years but I'm not positive off the top of my head. It's definitely worth checking into. If you sell it now, there will be no capital gains tax on it as it will be considered a primary residence.

Last edited by Bink; May 25th 2012 at 2:45 pm. Reason: additional info
Bink is offline  
Old May 25th 2012, 2:51 pm
  #10  
Forum Regular
 
Chrisdc's Avatar
 
Joined: Sep 2002
Location: Los Angeles
Posts: 277
Chrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond repute
Default Re: would you rent out or sell UK house?

Ah yes - it's coming back to me. I definitely fell foul of this - If I had been aware of this rule I would have sold within two years of leaving the UK.

But.... In the end I was ok because the property gained a huge amount of equity in the five years before I sold it, so I had a tidy profit.

Which I used to start a business in the US :-)

Originally Posted by Bink View Post
Also read into UK tax rules as there's relief from capital gains tax if you sell within a set period (even if it's rented out) if you move abroad. I believe it's 3 years but I'm not positive off the top of my head. It's definitely worth checking into. If you sell it now, there will be no capital gains tax on it as it will be considered a primary residence.
Chrisdc is offline  
Old May 25th 2012, 3:01 pm
  #11  
Rootbeeraholic
 
Joined: Aug 2009
Location: Houston, Tx
Posts: 2,280
Bink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond repute
Default Re: would you rent out or sell UK house?

Originally Posted by Chrisdc View Post
Ah yes - it's coming back to me. I definitely fell foul of this - If I had been aware of this rule I would have sold within two years of leaving the UK.

But.... In the end I was ok because the property gained a huge amount of equity in the five years before I sold it, so I had a tidy profit.

Which I used to start a business in the US :-)
Oh is it 2 years? I thought it was then quickly looked and saw 3 but couldn't be bothered to check further. I sold within 2 years and took advantage of it.
I also technically made a 'loss' on my UK house as far as my US taxes were concerned due to xrate fluctuations.
Bink is offline  
Old May 25th 2012, 3:15 pm
  #12  
Forum Regular
 
Chrisdc's Avatar
 
Joined: Sep 2002
Location: Los Angeles
Posts: 277
Chrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond reputeChrisdc has a reputation beyond repute
Default Re: would you rent out or sell UK house?

Sorry! My bad memory. You are totally right - you have to have lived in it for two out of the last five years to avoid the tax.

One other thing that helped me is that having the rental income/expenses pushed me over the threshold and allowed me to itemize, and thus claim a bunch of other deductions that were normally available to me (travel, business books, movie tickets etc...)



Originally Posted by Bink View Post
Oh is it 2 years? I thought it was then quickly looked and saw 3 but couldn't be bothered to check further. I sold within 2 years and took advantage of it.
I also technically made a 'loss' on my UK house as far as my US taxes were concerned due to xrate fluctuations.
Chrisdc is offline  
Old May 25th 2012, 3:19 pm
  #13  
Rootbeeraholic
 
Joined: Aug 2009
Location: Houston, Tx
Posts: 2,280
Bink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond reputeBink has a reputation beyond repute
Default Re: would you rent out or sell UK house?

Originally Posted by Chrisdc View Post
Sorry! My bad memory. You are totally right - you have to have lived in it for two out of the last five years to avoid the tax.

One other thing that helped me is that having the rental income/expenses pushed me over the threshold and allowed me to itemize, and thus claim a bunch of other deductions that were normally available to me (travel, business books, movie tickets etc...)
Well there are UK and US tax implications. The 2 out of 5 year rule is a US one. The UK one is to allow people time to sell their main residence when they move. I took advantage of both.
Bink is offline  
Old May 25th 2012, 3:30 pm
  #14  
BE Enthusiast
 
Bomjeito's Avatar
 
Joined: Jul 2009
Location: Houston
Posts: 522
Bomjeito has a reputation beyond reputeBomjeito has a reputation beyond reputeBomjeito has a reputation beyond reputeBomjeito has a reputation beyond reputeBomjeito has a reputation beyond reputeBomjeito has a reputation beyond reputeBomjeito has a reputation beyond reputeBomjeito has a reputation beyond reputeBomjeito has a reputation beyond reputeBomjeito has a reputation beyond reputeBomjeito has a reputation beyond repute
Default Re: would you rent out or sell UK house?

A lot of factors that are quite personal go into the sale of the house.

We sold our house. We didn't want the hassle of a renter, plus worried about times that it may be empty. We weren't in the center of town, and not all folks would want to live out in a village (esp one without a pub!)

We sold for a very tidy profit, but the housing market in NE Scotland around Aberdeen is pretty hot at all times. Not many 5 bedroom houses come on the market. Plus a few personal things - it was the house of his first marriage and we wanted a fresh start.

We bought in Houston. Now we realize that our stay will be less than expected (5 years vs. permanent) - and housing isn't easy to find with our particular desires back home. And the prices are higher than ever.

In terms of housing prices, we wish we'd kept the house. In terms of attachment and 'new start', we are glad we sold the home. We accept now that our return to Scotland will involve a new-to-us home at a higher cost. We are actually fine with that, because now we can find the home that WE want.

Houses have a whole bigger set of issues when renting, than say a flat.

So, are you or your family attached to the house? Will your kids be impacted?

20k profit for a house that includes all your furniture doesn't seem like a lot. And do UK savings accounts really earn 4% these days? Sheesh, here we are at .08%.
Bomjeito is offline  
Old May 25th 2012, 3:39 pm
  #15  
.
 
Yorkieabroad's Avatar
 
Joined: Nov 2002
Location: Where bad things rarely happen in movies
Posts: 8,933
Yorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond repute
Default Re: would you rent out or sell UK house?

Originally Posted by Bink View Post
I assume that you're taking more than 20k equity out of it and that that is only the profit.
Assuming this is the case, I'd sell, put the money into savings and earn interest on it.

Tennants are a pain, even the good ones. You'll have to replace all the furniture within 4 years if you rent it furnished, you'll probably have to replace carpets too, and re-paint plus any additional repairs to things like boilers (in addition to annual service to boiler which is a requirement when you have tennants).

The only reason I would rent is if you really want to move back into that house and you think you'll only be gone a year or two. Also be aware that it's a real pita trying to sell a UK house from the US. Timezone issues, paperwork issues, it's not much fun.
What he said!

Being a long distance landlord is fine if everything is going well - a pain in the arris when things start going south...My sister is "qualified" and looks after a lot of my stuff, but all of the properties that are out of her reach were ditched a long time ago.

I'd take the bird in the hand and sell it now. UK property is a basket case (OK, generalising there), and likely to be for a few years yet. You don't know when you are going back - you don't know if you will want to live in the same house even if you do go back. I used to work in an area where a lot of staff got expatted for a few years. A lot of them rented their homes out while they were away, but I'd say more than half ended up selling when they returned because circumstances had changed - marriage, kids, income, taste, office location etc etc.

If you feel the need to have an anchor, or a foothold back in the UK, then hang on to it, but otherwise, I'd sell.
Yorkieabroad is offline  

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.