Is it sensible to let out properties while going to live abroad?

Hi Craig

If you are confident in the ability and integrity of your agent then I don't think it makes too much difference whether you live around the corner or the other side of the world.

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Income is one consideration, the other of course is capital values. If you think property will increase in value at a rate better then another form of investment whilst you are abroad then logic says you should hold not sell.

Also remember, if property values increase by 5% per annum and you have a 75% mortgage then in reality your capital growth on the money you have tied up in the property is 20%, not 5%. Lots of people forget this and just compare the headline growth. If you have no mortgages at all, and you think property values are on the rise, you may well be better of remortgaging in order to quadruple the value of your portfolio.

Look at it this way. If one property is worth £100,000 and produces gross rent of £5,000 and capital growth of £5,000 that's a gross yield of 10% on your capital invested, or let's say 9% after deducting 20% of rental income for costs taking net rent down to £4,000.

If you remortgage that property to 75% of value that would release £75,000 to use as deposits on three more so you could have 4 properties growing at 5% and £20,000 of rental income.

You would have £300,000 of mortgages at say 4% which would cost £12,000 per annum. Budget say 20% of rent for costs (£4,000) per annum and you are back at the same net rental figure of £4,000.

£4,000 rental profit plus say £20,000 of capital growth equates to a 24% return on your capital.

You will find it a lot more difficult to raise finance when you live overseas so if you are considering to remortgage and buy more properties in order to increase your returns, now is the time to do it.

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Also remember that when moving abroad your agent will be required to deduct tax at source unless you fill out an NRL1 form to apply to HMRC for exclusion from the non-resident landlords scheme.

Reply to the comment left by "Chris Sheldon" at "13/06/2015 - 11:06":

Hi Chris

I was watching Property TV (Sky channel 238) last night and saw the LettingSupermarket.com sponsorship quite a few times at prime time 6pm to 8pm 😀
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Thanks I am thinking I pay tax to the country I am moving to ? And not the UK ?.thanks mark for the time to explain to me.it has helped me to put my mind at rest and to make a decision.

Reply to the comment left by "craig hill" at "13/06/2015 - 17:03":

You really need professional advice from a specialist property tax accountant - please see >>> http://www.property118.com/member/?id=452
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You pay the tax in the Country where the property is situated. Depending where you are moving to you. The country may have a double taxation relief.agreement with the UK.

Reply to the comment left by "craig hill" at "13/06/2015 - 17:03":

Hi Craig,

I am an abroad landlord to 4 properties.

Firstly, I am very fortunate to have family still locally in the UK. I have had issues with each of my places over the years and found even good agents are not as good as having someone you really can trust on hand.

Secondly, You need to declare any income in the UK to the UK tax office and pay tax on any amount over the free threshold (sorry can't remember what that is now!). You must have an NR1 in place which allows you to receive the rent tax free, otherwise the agent or tenant are supposed to withhold tax from the rent. You then have to do a tax return at the end of each year and declare all of this and pay tax if your income was high enough.

I live in Australia and they have a double taxation treaty with the UK. This means that although I also have to declare the income here and pay tax on it, I do get a credit back from the Australian government for the amount I paid in the UK. This is varied depending on what country you are moving to.

Its worth doing some research on this to check you won't be taxed twice as this may change your opinion on keeping the property.

Hi thanks for your reply.I will be going to Canada .so when I arrive when do I fill the nr1 form in ? .I am planning on going for a few years or permanent.the replies have been very helpful

Reply to the comment left by "craig hill" at "16/06/2015 - 10:57":

I filled out the form before leaving the UK, just had to fill in the dates which I would be leaving, and expected duration away. It was relatively straight forward to do. You can download the form from the UK gov website, fill it out and send it back. It was a few years ago I did mine, but they were quick to respond with a letter stating they were happy etc.

Thanks for the info, you made it easy to understand. BTW, if anyone needs to fill out a Form NRL1, I found a blank fillable form here:nrl1 form. I also saw some decent tutorials on how to fill it out.