Sell or Rent UK Property

[Andrew Williams]

Quite a hot topic lately this one!

Lots of members with their UK home up for sale at the moment and not having a lot of joy. Comments about dropping the price sometimes by thousands (no pound sign on my keyboard) lol.

I would suggest those of you that really don't want to hang around anymore and just want to be in Oz to seriously consider renting.

For those that do not know and that may have equity in their property, an option is to take some extra borrowing on your property known as a further advance/loan, speak to your Bank fairly easy to do.

I did this just before we came out whilst I was working. You can generally borrow up to about 95% Loan to Value of property (may be a HPLF insurance fee if over 90%)

If you want to buy in Oz then the reason for borrowing this money would simply be to say that it is for a second property.

You could then use this money towards funding a home here and take a mortgage if need be. (providing of course you have an income to support the mortgage here)

The rental market in the UK is extremely buoyant and you try to bring the UK mortgage payments in line with the rental that you are receiving by changing things like the term of the mortgage or repayment method (ie interest only or capital & interest).

I use a management property to find my tenant when I did this and we signed to a 6 month contract, after 6 months the tenant wished to sign another 12 month contract and as she was a very good tenant fortunately, we now do not use the management agency and have saved 100 pounds a month.

Of course this has its risks:

Further price decreases in the housing market, bad tenants etc.

However over the longer term house prices have always gone upwards with extremely good growth and you could save yourself thousands even if you have to maybe pay for a decorator once in a while to tidy up the house etc..

Also you would have the growth on two properties, good investment.

Anyway

Probably lots of differing opinions on this but thought it might help those that weren't aware this could be done,

Thanks

Andy

[Linda Bedford]

Hi, my name is Linda and we are moving over to Adelaide in the very near future with my husband's job, our visa should take another 6 weeks so hopefully it will be July.

We are having the very familiar problem of not being able to sell our house over here in Southampton, we have reduced the price by £20,000 and only had 1 viewing in the last 2 weeks at the reduced price!!

We are now thinking about the rental option, however, my husband really does not want to do this as he wants to free up our equity in this property to enable us to be able to buy the house we want over in Adelaide. At the moment we feel if we do follow this option, we have 2 options, one as suggested to get a further advance on our current mortgage to bring over some capital, the other is to transfer over the remaining profit we make each month from our rental income after paying the current mortgage and agents fees, which could be as much as £500. Does anyone know how we can do this, and what are the tax implications for us over there - would appreciate any help at all from any experts or anyone who has done this.

Thanks

Linda
:v_SPIN:

[The Hadleys]

Hi Andrew

Yes you are right it is a very hot topic. We have had our house on the market 7 weeks loads of viewings but its offers. I had a serious chat with a mortgage advisor from the company I work for, he did some figures for me and it looks like we will be renting. Rental fees will more than cover our mortgage and may even bring in a small income (not sure of the tax implicatons). In an ideal world we be better off to sell as we have £260K equity in our home. I think it would make more sense to wait for the market to recover and for the dollar to rise and then try to sell again, the downside of this is that the property in Adelaide in rising so its a no win situation.

I think we are going to wait until July, if no offer is on the table then we will look at putting the house in the hands of a letting agent and move to Adelaide maybe October.

Dawn

[Carole Jolly]

Hi Andrew. We are in the same boat. got visas but cant sell house. We have also heard that a bit of a credit crisis is going on over there too. What deposit do you normally require over there and how long would you need to be working for before being able to obtain a mortgage? can you use the equity of the UK property in financing in oz to get better rates? if so, how do you prove the value of your uk property?
Carole and Andrew

[Nicky]

Well my OH wanted to sell, like someone else mentioned to free up the equity in our property. We are also well aware that prices are going down here and up in Adelaide and we're already thinking about the difference in potential profits. So as I said he wanted to sell sooner rather than later. However I wanted to rent our house out first basically because we hadn't been to Oz before and didn't know anyone out there. I wasn't being negative just trying to cover all bases in case things didn't work out for us at least we'd have our house to come back to. I wanted to keep a foot on the property ladder until we knew for sure which way we were going. Having 3 kids I felt it was important having that security. So we got onto the Building Society who very readily agreed to give us an advance on our mortgage. We needed to realise some money to fund the move and get our new lives started. However when the figures for the repayments came through at the weekend, my jaw nearly hit the floor. They were absolutely ridiculous. No wonder they were keen to lend us the money. Unfortunately we've turned it down as we just can't afford it so we've come full circle and decided to sell afterall. A concern that I did have though was if we rented our house here and therefore had to rent in Oz, if we did decide it wasn't for us and wanted to come back, how could we afford to? How could we raise the £10k (shipping & flights) needed to get back? At least if we buy in Oz we'll have something to sell which I must admit makes me happier than the thought of, yes we've got our house in England for security but can't actually afford to make the move back.

Our visas aren't through yet and we won't probably put our house on the market until they are but I'm hopeful that we'll be able to sell ok as we're in a quiet street next to a University and is very popular as there always seems to be a shortage in student accommodation!

It's all still very much in the air, as you can tell, and we'll probably change our minds again before we're finished. It's knowing what to do for the best.


Nicky

[Andrew Williams]

Hi

Just in relation to the replies to this post.

If you are making a profit from your rental then you have some options!

If you do not need the money to supplement your income in Australia then reduce the term of your mortgage to bring the monthly repayments in line with the rental income, you will pay off your mortgage quicker.

If you do need the income here in Australia then this will help with your Australian mortgage/rent payments, greatly in some cases, mentions of 500 pounds profit. However the tax implications if you are a permanent resident will be that the profit is taxed at marginal rates in Australia. Using someone like HiFX to transfer the money will more than likely give you a better exchange rate than the Banks. (pity about the rate at the moment).

Deposit required for mortgage to buy in Oz?

You can borrow up to 100% in some cases, however any borrowing over 80% has an LMI attached Lenders Mortgage Insurance, initial fee’s are also quite high! It is not likely you will be able to use your equity in the UK as a security here. With regards to how long you need to be in a job, that depends on things like what you do now and used to do in the UK, probationary periods etc.

Why not consider renting for a while in Australia!!!

Mention of Adelaide house prices increasing rapidly. Not the case at the moment, I would not worry too much in the short term about this. They have had an amazing boom in the last five years and have certainly slowed down lately!!

Renting is about half the price of what the mortgage payments would be and the owner pays for council, strata and sometimes water rates. Put away what you are saving by renting and with the money you have brought over you can earn around 8% in savings accounts here at the moment!!



Andy

[The Hadleys]

Hi Andrew

I have just been in to see a letting agent about putting my property to rent. Its such an easy process he gave me some figures, if i want my property managed the cost is just 10% per month in our case will be £75.00 per month, the rental will definately cover mortgage and more, and what a brill idea of yours to reduced the term. We have decided this is the way for us so hopefully we will in Adelaide by October. Yipee

Andrew you are a star.

Dawn

[Nicky]

Renting is about half the price of what the mortgage payments would be and the owner pays for council, strata and sometimes water rates. Put away what you are saving by renting and with the money you have brought over you can earn around 8% in savings accounts here at the moment!!



Andy[/QUOTE]



Is that right then that renting in Oz is cheaper than mortgage repayments? I just assumed that it was the same as here, the other way round.



If you do not need the money to supplement your income in Australia then reduce the term of your mortgage to bring the monthly repayments in line with the rental income, you will pay off your mortgage quicker and have no tax implications on the rental income as you are making no profit.


That sounds a good idea, assuming you're not going to be let down by tennants. What happens if there's a break in tennancy? Surely that means you've got hefty payments to find?

[thelincolns]

What a useful post Andrew!! :v_SPIN:
Got to show DH-yesterday we had a serious chat on whether it was worth considering the emigration thing at all-and I felt I almost had a change of heart because of the financial aspect. It is such bad, bad timing- if you don't do the right things you could literally lose everything you worked hard for!!
Maybe you instilled some hope we may still make it happen...

MANY, MANY thanks

[sazzle]

hi,

just read your last mail, and noticed that you work in the mortgage industry. The wife and myself have started the visa process to come to adelaide and if you could spare a few minutes to give a brief over view what to expect, it would be much appreciated. I am a senior mortgage and insurance broker and she is a senior sales negotiator in an estate agent. Just really wanted to know how the industry is out there at the moment, what if any extra qualifications will we need to proceed in our chosen industries, and if possible any contacts you may have that might be worth meeting with when we arrive in adelaide to discuss possible job opportunities.

Any help would be great.

martyn