If you are a UK citizen who is relocating on a short to medium basis, you may be tempted to let your property out while living overseas as opposed to selling it. This will help you to keep your options open while you check out if life abroad really is for you and can give you the peace of mind that if you do decide to return home at a later date you will have somewhere to live.
In an ideal world you will find the perfect tenant who will always pay their rent on time, will look after your property well and who will treat your home like it is their own. Unfortunately we all know that the ideal world that we dream of doesn’t always transpire in reality and, for this reason, there are a number of things that you need to take into consideration when letting your UK property while living abroad.
Appoint a professional to manage the process for you
While you may tempted to ask a friend or family member to manage the rental for you so that you can retain a higher percentage of the revenue, this is not always the best idea. There are a lot of different areas to consider, including maintenance, the rental contract and the ongoing management of issues. While your friends or family may be initially happy to help out, when they start receiving calls in the middle of the night from angry tenants who claim that the ceiling is leaking, their patience may wear thin. Yes, estate agent management fees can be high but having the whole process managed from beginning to end will ensure that you can rent your property out quickly and easily with as little stress as possible.
Thoroughly check out the tenants
Finding reliable and trustworthy tenants can actually be quite challenging. Ensure that you secure references in advance of signing any contract and that they pay a suitable deposit that adequately covers the cost of the items that will be left in their care. It can be a really good idea to join a landlord’s association. Through doing so you can have a useful resource available at your fingertips that can help you to deal with any issues that arise.
Ensure you complete and return the NRL1 form
The Non-Resident Landlord form (NRL1) form has to be legally returned to the tax office if any of the registered owners of a property will be abroad during any, or all, of the rental period. Once the form is completed and signed off, you will be issued with a number for exemption of deduction of tax at source from the rental income. At present, under Section 42A of the Income Tax and Corporation Taxes Act, landlords who have a main residence that is outside of the UK are required to pay 22% tax on their rental income. The approval of the NRL1 form permits the managing agent (if applicable) to deduct tax from the rental income before transferring the remaining cash to you.
More information: http://www.hmrc.gov.uk/CNR/
Provide an address to serve notice
In order to legally rent out your UK property, you need to ensure that you provide the tenants with an address to which they can serve notice. This address needs to be in England or Wales and is required under Section 48 of the 1987 Landlord and Tenant Act 1987.
Ensure you are aware of your legal obligations
There are a number of laws that UK landlords must follow when renting their property to tenants. Examples of the requirements that you will need to adhere to include the following: certificates for fires, heating, boilers and appliances, smoke and carbon monoxide detectors.
More information: https://www.gov.uk/renting-out-a-property
Use the Tenancy Deposit Scheme
All UK landlords are now required to protect their tenant’s deposits through the use of a Government Authorized deposit scheme. Within 14 days of receiving the deposit, you will need to contact the tenant and inform them how you have ensure that their deposit is protected. There are three schemes to choose from.
More information: https://www.gov.uk/tenancy-deposit-protection/overview
Ensure your property is insured
It is important that you inform your insurer that someone else will be living in your property while you are out of the country. This is very important as your insurance may be invalidated if you fail to do so. Furthermore, you may be expected to arrange specialist landlords insurance on your property.
Consult your mortgage company
Renting out your property while you are living overseas may impact your mortgage requirements and payments. It is therefore important that you contact your mortgage provider to enquire what the impact will be before you commence the rental process.