Moving abroad to start a new job offers loads of benefits. As well as experiencing life in a new land, 2019 research by Good Move found that workers across the most popular sectors could earn an average of £32,922 more than in the UK by moving to a different country.
Indeed, more than 120,000 Brits chose to move abroad in the year to September 2018, and UN figures show that there are now almost five million British citizens residing in other countries.
Here’s a common scenario. You are settled in the home you have bought in the UK and are offered a job abroad, perhaps for a temporary period of one or two years. Your job goes well, and you decide to stay for longer and to rent out the property you have in the UK.
If you have moved abroad, or you’re thinking of heading overseas, there are some crucial steps you have to take with respect to your UK property. It’s not as simple as finding a tenant and then emigrating, as this comprehensive guide explains.
1. You’ll need consent to let the property
A common mistake that many people make when letting out their own home is failing to seek the consent of their mortgage lender.
You must get the permission of your lender to let out your home if you’re not switching your mortgage to a dedicated *Buy to Let deal. If you want to remain on a residential mortgage, you’ll need the permission of your bank or building society. If you don’t, you could be in breach of your mortgage contract which may be considered fraud.
Bear in mind that not all lenders offer this facility. If your lender will grant permission, this may only be for a fixed amount of time – perhaps 6 to 12 months – and so you may need to obtain further permission later on if you remain overseas.
If you’d like some guidance on how your own particular lender deals with consent to let requests before you approach them, please get in touch with an Altura adviser.
2. You’ll need specialist landlord insurance
Just as you could be breaching the terms of your mortgage by not seeking consent to let, you could also invalidate your home insurance if there is a tenant in your property.
When you rent out a property the associated risks are different, and these are not typically covered by a standard buildings and contents policy. If you come to make a claim you could find that the insurer rejects this, leaving you out of pocket.
Check the terms of your current policy and, if necessary, take out specialist landlord insurance.
3. Getting to know *Buy to Let regulations
The regulations governing letting a property change all the time. From aspects such as fire safety to obtaining an Energy Performance Certificate, becoming a landlord means you have to keep up to date with all changes in regulations.
This is where employing the services of a good quality letting agent can help. If you are going to be overseas, finding an agent who can show your property to potential tenants, obtain references, deal with maintenance issues and ensure all regulations are met will give you peace of mind that your property is in good hands.
4. The tax implications of letting
In the last five years, the tax treatment of rental income and landlord earnings has changed dramatically.
From April 2020, landlords can no longer deduct the cost of mortgage interest as an ‘expense’ on their personal tax return. This has been replaced by a 20% tax credit.
In addition to any Income Tax that you may have to pay on the rental income, there may also be Capital Gains Tax and Inheritance Tax implications of owning a property.
As an expat, it’s important to get expert tax advice so you ensure you’re paying the right amount of tax and mitigating any liabilities where appropriate.
5. Finding an expat-focused lender
Once your consent to let has expired with your current lender, you may want to consider remortgaging to a new, expat-focused lender. You may want to:
- Ensure your mortgage is more appropriate for your new circumstances
- Restructure your mortgage
- Take advantage of prevailing interest rates
- Raise capital; for example, to purchase a property in your new location.
If you need help in finding a lender that welcomes expat applications, we can help. Email [email protected] or call us on +44 (0) 20 3786 7270 to find out more.
6. Make sure you change your address (both potential applicants registered)
When you move overseas, make sure that all parties to the mortgage are registered for the relevant bills, insurance documents, mortgage and bank statements at your new foreign address.
This can be hard in certain countries (e.g. Dubai, Switzerland) but it is important that you are kept up to date with any financial commitments you have in the UK.
Ensuring your address has been changed will also be important if you need to prove your address; for example, to obtain a new mortgage in the UK.
7. Get your documents certified
While you are still in the UK, have your documents certified by a solicitor or by an Altura adviser. This ensures you have official, certified copies of your important documents ready for as and when you want to remortgage.
If you’re thinking of letting your property in the UK and you need advice, please get in touch. Email [email protected] or call us on +44 (0) 20 3786 7270.
