Renting out your property in the UK when you move abroad

Given that prices on house sales have dropped considerably in the UK, you may be wondering if your best bet may be to hang on to your property after moving abroad and then sell it later. It also means that if your move does not go according to plan you have at least not burnt your boats completely.

If you decide to keep your property and rent it out, then two more decisions are paramount:

Firstly, furnished or unfurnished?

If you are like me, then you want to take all your precious things with you. If you are like most other people, you will be delighted to leave them behind and completely refurnish abroad. First prize would of course be that you leave all your furniture in your home. You rent it out furnished and then, with the proceeds from the rental, you have enough to rent and buy new furniture abroad, and save yourself a bundle in shipping costs…but it doesn’t quite work like that.

Furnished properties need to be furnished to a very high standard, and all soft furnishings need to be certified as fire resistant. On top of that you may not get much extra rent on a fully furnished property. I know when I rented here in London the rent was the same furnished or unfurnished, so you may decide it’s not worth leaving all your treasures behind.

You do need by law to leave a few things behind for your tenants however; things like a stove, fridge, washing machine and garden tools/lawn mower if they will be looking after a garden..

Letting Agents
A letting agent will find tenants for you, arrange necessary maintenance, repairs and inspections, and generally look after your property. You’ll pay for the privilege of course – 10-15% plus VAT of the rent your tenant pay will go straight to the letting agent.

You do need to keep on top of things with your letting agent, for a number of reasons.

- Letting agents, like real estate agents, are optimists – do your own research on what properties like yours are renting for

- You need to make sure inspections are carried out, such as the annual gas safety inspection and regular (6-monthly) visits to your property by the letting agent

- You need to read the check-in and check-out reports and compare them – your letting agent will probably rely on you to highlight problems

- It can seriously affect your ability to pay your mortgage if your tenants are not making rent payments on time, or if your property is vacant for a while. Keep a contingency fund in the UK of around 3 months rent to cover such eventualities if possible. Keep in touch with your mortgage company if you do start having difficulty making payments

- A letting agent may not pursue unpaid rents with as much vigour as you would like them to – you may need to step in and sort this out. I would insist on a monthly debit order: if your potential tenants balk at this – I would look for other tenants!

- You will need to keep re-decorating your property to maintain a high standard of tenants – and remember that some tenants can do considerable damage in a short space of time

- If you do think your house may be due for some redecorating, try to arrange for a friend or family member to look over the property with the letting agent – they may give you a clearer idea of what needs to be done

- It is much better to keep a good tenant on a lower rent than it is to keep raising the rent – check-in and check-out inspections are costly, and you may have vacant periods between tenants. You’re also liable for council rates and utilities when the property is vacant. My parents lived in a rented home for years and never had the rent increased. They however carried out all maintenance and repairs and left the house in a far better state than when they had first occupied it!

- Read and understand the tenancy agreement you sign with the tenant – keep an eye especially on minimum notice periods. You can also specify a break clause, where you can ask to get the property back if you need it.

Despite the costs and hassle, most emigrants choose to use a letting agent rather than relying on relatives or friends to look after their property. There is quite a lot of paperwork involved, both for tax and ongoing things such as check-in/check-out inspections, and even to change utilities over between tenants – this could prove a nuisance for friends. There are also health and safety regulations for things such as fire alarms, extractor fans, boiler inspections, electrical inspections of appliances, and even requirements for fire escapes in some properties, all of which needs to be documented and kept up to date. There is also a lot of responsibility involved in choosing tenants and collecting rents. You don’t want to feel obliged to fly back to the UK when anything goes wrong.

You will need to let your house and contents insurer know when you are letting out your house, and may need to arrange special landlord’s insurance. The premiums may be a bit more than you are paying now, but you may be able to reduce your contents cover if you are letting your property unfurnished.

Make sure you understand the conditions of your insurance, especially if your property is going to be empty for a couple of weeks – you may need to get your letting agent to visit the property at set intervals and document their visit.

You also need to let your mortgage provider know if you are letting out your home. They may ask for a one-off extra payment or impose other conditions as they see fit.

Remember too that before you leave the UK, you’ll need to contact the HMRC to register as a non-resident landlord.

And finally, you need to make very sure that you can cover your costs with the rent you receive. The rental income needs to cover your costs such as mortgage (if applicable), insurance, maintenance, rental agency fees, change-over costs, provision for vacant periods, tax and so forth.

How to make your overseas buying dreams come true this year

I am unabashedly a list girl, so yes: I will be making a list of how to make your property purchasing dreams come true, but there is one thing that is by far and away the most important step. You must want it enough.

I know that sounds simplistic but it is nonetheless THE most important aspect of your dream. The reality is that there will be a fair amount of work ahead and you may encounter a few problems along the way so you need have the determination to push on with your quest, but remember that countless other people have done it and you can too. Here comes that list:

• Cost: It is essential that you have a clear idea of exactly how much you wish to spend from the outset – and then that you stick to your budget. If you need a mortgage, try to get an idea as to what sort of mortgage you can get up front, and certainly know what you can afford to repay. You also need to have a good knowledge of all costs that you will incur on purchase (both the cost of the property and the purchase charges), how much you will need to spend per annum, transport costs etc.
  
  
• A Currency company: Aligned to cost is that you open an account at a first class currency company, one certainly regulated by the Financial Services Authority (FSA) under the new Payment Services Regulations 2009. When I moved countries I was unaware of the enormous savings a currency company can secure. Go to: http://www.smartcurrencyexchange.com/ for an outline as to how they can save you heaps of money. And remember: if you decide on a price to pay for your new property, and are happy with that price, it may be best to lock your currency in at that day’s rate. Certainly people who did that in early 2009 laughed all the way to the …well, currency company, by the end of the year!
  
  
• Location: You will need to decide exactly where you wish to buy: this decision will be dependent on what you are using the property for. If you think you may want to rent it out at any stage, then the location is of primary importance. For instance you will need to think very carefully about access, both by air from the UK but also the distance from the airport once there
  
  
• List your requirements: Make a thorough list of your requirements, specifying what is absolutely essential to you: 3 bedrooms, a bathroom rather than a shower (my pet requirement!) etc – and don’t be swayed, no matter how pretty the house is
  
  
• Views: Ensure that your lovely view cannot be obscured: One of my saddest memories is of a couple who bought a flat abroad with a heavenly sea view. When they next visited the property, a huge block of flats totally obscured their view – they immediately put their property on the market, with their dreams in tatters
  
  
• Reputable Estate Agents: Decent agents will happily listen to your questions and answer them as best they can (plus we can help you find those agents!). You may be able to make offers of up to 20% less than the price they are asking if the area is one that is a buyer’s market - the agents we recommend will guide you as to which these are: make use of them!
  
  
• Lawyer: Always use your own independent lawyer. If you are recommended someone once on the spot, always ask for personal references and check them
  
  
• Sign ONLY when contract checked and correct: This may seem an obvious one but in the excitement of buying your property you may overlook the importance of getting your contract correct. If you don’t fully understand everything, get the contract translated, and changed if needs be
  
  
• And finally – take your time! Do not allow yourself to be rushed into anything – it’s a huge decision and one that you will have to live with, so make sure it is the right one
  
  
  If you need any help at all just phone the OGC Resource Team on 0207 898 0549 and they will gladly assist you where they can - there is currently no cost nor is there any obligation to use our recommendations at all.