Let­ting a prop­erty while work­ing overseas and en­sur­ing bed­bugs don’t bite

Home­own­ers will need a good let­ting agent if they are of­fered a spell of work overseas

Business Traveller - - CONTENTS -

You’ve been of­fered the op­por­tu­nity to work overseas for a few years. You’d like to take up the of­fer – it’ll be a great ex­pe­ri­ence. But you al­ready own a prop­erty in the UK. So what do you do? You could sell up, but that’s time con­sum­ing. Also, you’re quite fond of your house. And given the va­garies of the Bri­tish prop­erty mar­ket, you can’t be sure you’d be able to buy back in, if and when you re­turn from abroad. How­ever, you can’t just leave it empty – the mort­gage won’t pay it­self, and you’ll need the funds to be able to rent (or buy) in your new coun­try. So how do you go about let­ting it out?

BE­COM­ING A LAND­LORD

If you’re mov­ing overseas, it al­most cer­tainly makes sense to em­ploy some­one to man­age and let your prop­erty on your be­half. While you’re get­ting used to a new cul­ture and work­place, the last thing you want is the has­sle of find­ing a ten­ant, or deal­ing with emer­gency plum­bers at 5 o’clock in the morn­ing.

It is best to find an agent who will both man­age the prop­erty (deal with prob­lems and get trades­peo­ple in) and let it for you (find a ten­ant and man­age de­posit-tak­ing, leases and the like). Get quotes from three dif­fer­ent agents. They should be mem­bers of the As­so­ci­a­tion of Res­i­den­tial Let­ting Agents (ARLA), which re­quires that they meet cer­tain min­i­mum stan­dards in terms of de­posit pro­tec­tion and train­ing. This is im­por­tant – in the UK, leg­isla­tive de­mands on land­lords are in­creas­ing, so you want make sure that your agent knows what they’re do­ing. Fees vary, but ex­pect to pay be­tween ten per cent and 18 per cent of your ren­tal in­come, says in­de­pen­dent prop­erty ex­pert Henry Pryor. Also note that the laws around let­ting agency fees are chang­ing in Eng­land and Wales. Let­ting agents will no longer be able to charge var­i­ous fees to ten­ants, so make sure that this change is ac­counted for in any quotes you re­ceive.

Ask to speak to other land­lords and ten­ants of the prop­er­ties that the agent man­ages – if they ob­ject, then clearly that’s a bad sign. At the end of the day, notes Pryor, your manag­ing agent is rep­re­sent­ing you. An un­re­spon­sive agent with low stan­dards of cus­tomer ser­vice will re­flect badly on you. More­over, you want your ten­ants to stick around for as long as possible, ide­ally un­til you re­turn to the coun­try –

“voids” (pe­ri­ods of nonoc­cu­pancy) are a land­lord’s big­gest bug­bear and ex­pense. That said, when draft­ing the lease, it might make sense to talk to your let­ting agent about in­clud­ing a break clause, just in case you need to re­turn home early.

Also, bear in mind that rent­ing a prop­erty isn’t like sell­ing one – if you want to se­cure pro­fes­sional ten­ants, it re­ally has to be in “move-in” con­di­tion. So if the decor is a bit tired, or there are main­te­nance jobs that have been sit­ting at the bot­tom of your to-do list, then now is the time to make them a pri­or­ity, and budget ac­cord­ingly. Depend­ing on whether or not your fur­ni­ture is go­ing overseas with you, you may also need to con­sider rent­ing a stor­age unit for your valu­ables and any­thing that you don’t want to keep in the prop­erty.

THE PA­PER­WORK

If you have a mort­gage, you’ll need to tell your lender that you’re let­ting your prop­erty out, which means you may need a buy-to-let mort­gage. That could im­ply a higher monthly bill, so talk to your lender early on in the process to get clar­ity for bud­get­ing pur­poses. Also, be aware that mort­gage-in­ter­est re­lief for land­lords is be­ing steadily re­duced. Land­lords used to be able to claim 100 per cent of the in­ter­est paid on their mort­gage against their in­come tax bill, but this is no longer the case. In ef­fect, it means that if you are a higher-rate tax­payer, then be­ing a land­lord with a mort­gage is be­com­ing more ex­pen­sive. You’ll also need to talk to your insurers about get­ting a pol­icy tai­lored to land­lords.

You have to pay UK in­come tax on your ren­tal in­come. If you live abroad for six months or more per year, you are au­to­mat­i­cally classed as a “non-res­i­dent land­lord” by HM Rev­enue & Cus­toms (HMRC), even if you are still a UK res­i­dent for other tax pur­poses. As a re­sult, you will pay tax via the Non-Res­i­dent Land­lord Scheme. Your let­ting agent must deduct tax at the ba­sic rate (af­ter al­low­ing for ex­penses), un­less you ap­ply to HMRC to have it paid gross. You will also need to re­port your ren­tal in­come on your an­nual self-as­sess­ment tax re­turn. Ir­ri­tat­ingly, you can’t fill this part of the form in on­line, so you’ll need to send it by post by Oc­to­ber 31 each year – so you might want to budget for an ac­coun­tant as well.

If you want to se­cure pro­fes­sional ten­ants, your home re­ally has to be in “move-in” con­di­tion

E XECUT I V E E D I TOR OF MONEYWEEK MAGA ZI N E JOHNSTEPEK

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