According to a House of Commons Library report in 2014, more than 5 million Britons currently live abroad. In 2014 alone, approximately 320,000 left the country to pursue a life elsewhere. But what are British migrants doing with their homes when they move abroad? With UK property prices constantly rising, as well as average rental prices, many Britons overseas are either keeping their UK property or purchasing “buy-to-let” UK properties to rent out.
Thinking of moving abroad and renting your home?
Whatever your reason for moving abroad, maybe you’re retiring somewhere sunny or you’ve found employment or business opportunity outside of the UK, it’s common for expats to rent out their property instead of selling it. This ensures a home for them to return to should they eventually move back to the UK, or potentially as a smart investment for them to capitalise on later down the line when the price of the property has seen a significant increase. Not to mention the yield of rental income to support their lifestyle abroad if they’re retired or to supplement their foreign employment income.
If you decide that this is the solution for you, and you’re not ready to sell your UK property just yet, there are some differences between being a UK-resident landlord and a non-resident landlord that’s worth taking the time to understand before you become an overseas landlord.
Tips for new overseas landlords:
1) Find a letting and management agency.
Dealing with tenants when you’re not living in the same country (or timezone!) can be insanely stressful. Even if you have the most considerate tenants of all time, there will still be times when you really need someone in the country to be able to deal with certain issues. What if your amazing tenants want to move out? How are you going to look for new tenants? What if your tenants aren’t so amazing? Who’s going to make sure that your biggest asset isn’t being mistreated?
A professional lettings and property management agency will ensure that inspections are carried out regularly, any repairs and maintenance are performed as required, and work to minimise the time in which the property is vacant in between tenants whilst making sure that all tenants have been formally background-checked for suitability to the property. The combined fees for these services are usually between 10-15%. Alternatively, if you have a friend or family member whom you trust with these responsibilities, then you may be able to get around the agency route and pay less or even nothing for the management of the property (simply paying them back for any repair bills). Depending on how seriously your friend or family member take their role, they may do a very good job of regularly visiting the tenants to check up on the state of your property, and address any of your tenants’ concerns in regard to repairs and maintenance.
2) Find out whether you need to pay UK tax.
If you live abroad for more than 6 months per year, you are classed by HMRC as a “non-resident landlord” and your UK rental income will need to be taxed. (Even if for tax purposes, you are a UK-based resident.) The Non-resident Landlords Scheme applies to all non-resident landlords unless tenants pay rent of £100 a week or less.
If you are using a letting agent to manage your property, they can deal with the tax for you in accordance to the Non-resident Landlords Scheme which requires the UK letting agents to deduct Basic Rate tax (factoring in any deductible expenses) from the rent which they collect on your behalf. The scheme applies even if the rent amount is less than £100 a week, unless the letting agent has received written notice from CNR (HMRC’s Centre for Non-residents) informing them not to. You will have to apply to HMRC to receive UK rental income without the deduction of UK tax beforehand.
If you don’t use an agent, then your tenant is the one responsible for deducting tax from their rent payments to you.
(For more information on The Non-resident Landlords Scheme, GOV.UK have put together a 61-page document containing “Guidance notes for letting agents and tenants”, which you can read here.)
3) Non-Resident Landlords Insurance
Having non-resident landlords insurance will help to protect your UK property while you’re living abroad. You can tailor an insurance policy package to suit you, covering the financial cost of repairs to the building’s structure, the contents of your property if you are renting it out furnished, loss of rent in the event that your tenant fails to make rent payments, and more.
As the non-resident landlord insurance policy belongs to you and is in your name, you will keep the policy with you, and there is no need for it to be left in the UK or with your letting agents as the insurer will not deal with them.
Many landlord insurers will charge an additional fee for non-resident landlords, but you’ll be pleased to know that we don’t! You can even purchase or renew your insurance policy online to keep those international call costs down. Our landlord insurance premiums start from £85 per annum.
Contact us now for your non-resident landlord insurance!