Anyone renting out their house back in the UK?

[trevorpayne]

have you tried the mortgage works for a buy to let mortgage a lot cheaper rate interest only though there are some set up fees.

it worked well for for us and released some equity.

[Guest gazzman]

Hi Guys, i'm a mortgage advisor here in the Uk working for a high st lender, please do not just let the house out without telling the lender and getting landlord ins. Firstly if you have any problems with your house whilst you are away and need to claim the ins and they find out the mortgage is not on a BTL they will refuse the claim and you are left with a big problem, the other thing is the lender can call up the mortgae which means you have 28 days to pay in full, not a nice situation to face on the other side of the world. Also there is lenders that allow you to switch to them from overseas, i have just done a mortgage for this situation they will limit the LTV to 60% though. If you need any help send me a Pm and i will tell you how to do this. Cheers

Hi all

 

We're due to be coming out this Summer for a couple of years - can't wait.

 

We want to rent out our UK house in the meantime because we don't know what our long term plans will be.

 

We're on a terrible fixed rate with the Halifax at the mo (5.19%) which is due to end in September, while we'll be in Adelaide (all being well).

 

At which point, our mortgage would normally drop to 3.5%. Ker-ching we say! But wait...... Because interest rates have dropped through the floor recently, Halifax have sniffed out that they can grab some cash from this and are insisting we would need to take a "consent to lease product" at..... 5.69% ! That's higher than the rate we pay now!

 

We really don't want to rent our UK house without the lender's permission, but we don't like being ripped off either - when interest rates were higher they just charged 1.5% above your normal rate for consent to lease. Now the rates are low, all of a sudden consent to lease "products" are compulsory - almost like a buy-to-let mortgage.

 

I just hate the way banks/mortgage companies sniff out that you might "do well" from the low interest rates, and put a stop to it.

 

Anyhoot - has anyone get any recent experience of this? Anyone recently rented their house in the UK and got consent to lease on better terms?

 

Our only other option is to move mortgages in September whilst we're in Oz - can't be easy.... Anyone done that either?

 

Or move mortgage provider a month or two early (and pay Halifax's £1,080 early penalty fee).

 

I don't have a lot of love for the Halifax right now...

 

So - any tales of similar experiences would be greatly appreciated. Many thanks!

 

Can't wait to join you!

 

RTL

[Guest viewaskew]

I'm so glad I found this thread even if not the answers to the same situation I'm in. We're on a tracker of 1.55% but our lender no longer offers mortgage products so would have to go to another lender but initial searches show we could end up paying a few hundred less on an interest only rate then the full repayment capital and interest we’re currently on now!

 

Seems any plan to obtain a little profit from rental income after tax and put towards funding setup costs down under may be not worth thinking about. I can see why people are tempted to not tell the lender. I’ve asked people who had to cross this bridge and 50% went the “don’t tell ‘em” route and benefited massively and the other 50% were honest, paid 1000s in product fees and 2-3 times more interest.

 

I want to move to an interest only mortgage to help prepare financially us for the move to Adelaide late UK Summer 2012 but am so torn especially as the up front costs range from £2000-£3000. Thats something I didnt bank on this year.

[Guest matelotchick]

Hi RTL.

 

We're hoping to make the move to Adelaide this year and I've been looking into this as well. Our motgage is with Santander and I've just asked them and they've said we can keep our existing mortgage (I thought we would have to move to interest only) and just make a formal request in writing to rent out the property which will cost £295. I know a lot of people do things without being completely honest about where they are etc - good on 'em I say but I know that I probably couldn't sleep at night if I didn't do things right (my mother would be so proud .....!!!)

 

My advice to you would be to get an independant mortgage advisor on the case to hunt out the best deal for you in your circumstances.

 

Good luck!

[Guest Ryan T. Lion]

Hi there

 

This is actually quite an old thread - we've been in Adelaide 5 mths now and the mortgage is long since sorted.

 

FYI we got a lady Motgage Advisor on the case (she's in the UK but her daughter is on PIA) and she got us a buy-to-let mortgage. There weren't that many whom offered BTL deals to people whom ALREADY owned their home - she was very helpful and put lots of time/effort in, and got paid by the lender - not us.

 

PM me I you want her details - she was very good.

 

Ryan

 

Hi RTL.

 

We're hoping to make the move to Adelaide this year and I've been looking into this as well. Our motgage is with Santander and I've just asked them and they've said we can keep our existing mortgage (I thought we would have to move to interest only) and just make a formal request in writing to rent out the property which will cost £295. I know a lot of people do things without being completely honest about where they are etc - good on 'em I say but I know that I probably couldn't sleep at night if I didn't do things right (my mother would be so proud .....!!!)

 

My advice to you would be to get an independant mortgage advisor on the case to hunt out the best deal for you in your circumstances.

 

Good luck!

[JimandBarbinAus]

Just wondering how everyone is finding managing their uk rental from oz? are you finding it easy enough to account the money and pay tax on the income easily enough? Ive heard that you should declare it in oz to the taxman?

[JimandBarbinAus]

:huh:any thoughts people?

[The Sowters]

Hi

We declare it on our Oz Tax Return as I do not want to get stung down the line as and when we sell and move the money over as the OZ tax man can see your bank accounts/interest etc and will ask questions as to where the money came from etc. However I keep a good record of my allowances as to what I can claim back. I do not pay tax on it in the UK as I don't make any profit as such and we we do, it is very marginal. Check out the UK Tax Office website about non residential residents renting out houses and there are loads of pages with advice as to what you can offset for i.e. mortgage fees, insurance, cleaners, gardeners, any rental fees incurred by agencies etc etc so you put down as much as you can - only if it is true of course just in case you need to verify things. This way any such income from the property will be below the tax threshold in the UK. Then here I split the income and expenditure and declare what is left between my husband and I as the house is in joint names. As yet we have not been penalised in the UK or OZ for any tax re our rental. Hope this helps. Be honest I would say otherwise you will get caught out and then they will start digging.

[Elliot]

What The Sowters say is correct.

Example:-

Rental income per month. £1000

Mortgage interest amount per month (the capital repayment part of the mortgage payment is not allowed). £300

Profit per month. £700

Profit for year. £8400

Tax free allowance for year end 2013 £8105 leaves £395 to be taxed at 20% is £79

When you do your tax return in Australia they take into account that you have already paid £79 in tax and therefore you don't get taxed twice.

Obviously these figures are hyperthetical.

There are additional allowances that you can use to reduce your profit even further.

Examples:-

Fees for the estate agent/rental agent, buildings insurance, etc. If you say it is rented out furnished then there is an additional 10% of the total rental income allowed as well, from the example that would be another £1200 to be deducted from your profit.

 

THE BIG ISSUE WILL BE CAPITAL GAINS TAX.

 

As you are now living in Australia, your house in the UK is classed as a foreign investment and as such when you come to sell you will be eligible to pay CGT which in Australia is simply added to your income which could push you into a much higher tax bracket. Please get some professional advice on this to fit your personal circumstances as you could find yourself severely out of pocket.

 

If you need any more advice then PM me.

[JimandBarbinAus]

What The Sowters say is correct.

Example:-

Rental income per month. £1000

Mortgage interest amount per month (the capital repayment part of the mortgage payment is not allowed). £300

Profit per month. £700

Profit for year. £8400

Tax free allowance for year end 2013 £8105 leaves £395 to be taxed at 20% is £79

When you do your tax return in Australia they take into account that you have already paid £79 in tax and therefore you don't get taxed twice.

Obviously these figures are hyperthetical.

There are additional allowances that you can use to reduce your profit even further.

Examples:-

Fees for the estate agent/rental agent, buildings insurance, etc. If you say it is rented out furnished then there is an additional 10% of the total rental income allowed as well, from the example that would be another £1200 to be deducted from your profit.

 

THE BIG ISSUE WILL BE CAPITAL GAINS TAX.

 

As you are now living in Australia, your house in the UK is classed as a foreign investment and as such when you come to sell you will be eligible to pay CGT which in Australia is simply added to your income which could push you into a much higher tax bracket. Please get some professional advice on this to fit your personal circumstances as you could find yourself severely out of pocket.

 

If you need any more advice then PM me.

 

 

Hi yes but this income £8000 odd you would have to declare to the tax man is oz as this is classed as worldwide income so you would still pay tax @ 20% as Im presuming most people would earn over £8k in a year including their salary?

[JimandBarbinAus]

Hi income is income you still have to pay tax on it wherever you are in the world you would have to declare it to the ozzy tax man if over your allowance and thats usually at 20%.

[Elliot]

Jim and Barb,

 

Don't quote me on this hence getting professional advice but I think you are entitled to a tax free allowance in both UK and Aus.

 

Therefore you get your tax free allowance in the UK meaning in the example I gave you would only have to pay 79 in tax. Obviously the whole 8400 profit would have to be declared on your Aus tax return. They then work out what tax is due and would deduct the 79 already paid so there is no double taxation.

 

What I don't know is what is tax deductible in Aus as it may be different to that in the UK.

 

I have property in USA and they have much more generous allowances in terms of what you can and can't deduct, they even have an allowance for depreciation...

 

We have engaged an international financial advisor for this very reason as we are trying hard not to get too stung by the tax man where ever he/she may be in the world.

 

Good luck and see you in Aus.