to letWhen planning to serve God abroad, one of the decisions we have to make is what to do with our houses.  Many of us let them out, either commercially or to friends, and the principal advantage of this is that we have somewhere to come back to, when (and if) we retire.  It can also double as a source of income, and somewhere to keep our furniture and other personal belongings.  However, there are also plenty of drawbacks to letting out our homes.  Lengthy periods without a tenant, or tenants who fail to pay the rent or abuse the property are some of the most obvious, but there are many other pitfalls.

We have discovered that most sending agencies and churches decline to give advice about letting one’s house out, since they are reluctant to be seen to be giving financial advice.  So we have produced this blog as a guide to some of the challenges involved in letting out property while you are abroad.  It is important to stress that this is not advice on what decisions to make, and you should consult professional advisers where appropriate.  A fuller version of this blog can be found as one of our Briefing Papers.

Issues concerning tenants: you may need to think about the type of tenants you want to attract.  Do you want long- or short-term tenants?  Professionals?  Students?  Do you let the house furnished, in which case your furniture can be damaged – I heard of a tenant who threw away a mission worker’s dining table because she didn’t like it, and left the sofa in the garden!  If you let it unfurnished, where do you store your furniture?

Financial issues: one challenge may be getting a mortgage, particularly as you may not have a regular stream of income so lenders may be reluctant to take on your risk.  A buy-to-let mortgage may solve this, but may be more expensive.  An Independent Financial Advisor can help you with this.  If you already have a mortgage, you should check that by letting you’re not invalidating the terms of your mortgage.  You also need to recognise that part of the risk of renting is having periods when you have no tenant.


Agent issues
: if you engage a professional agent to administer your letting for you, be aware that a commission of 10-17% of the rent may actually cream off all your profits.  They may also charge you high fees for sending out plumbers or decorators.  But they do have insurance, and knowledge of the legal situation which can be a minefield.  Leaving this responsibility to a busy sibling or elderly parent may be a heavy burden.

Maintenance issues:  looking after your property becomes harder when you are overseas.  Little repairs which you would normally do yourself will have your tenants calling out a professional who may charge you a significant fee.  How are you going to maintain the garden?  Expect the tenants to do it?  Pay for a professional gardener?  Replace it with low maintenance shrubs?

Tax issues: You will be liable to pay tax on the rental income you get, although you can claim your legitimate expenses as tax deductible.  Under HMRC’s Non-Resident Landlord Scheme, agents are normally required to pass on rent net of basic rate income tax, but if you are living abroad with little likelihood of having to pay UK tax, then you may apply for your rent to be passed on gross.  A qualified accountant can help you with this.

Legal issues:  Lessors are responsible for health & safety compliance, and failure to do so is a criminal offence which can result in a prison sentence and/or a substantial fine.  And that’s only for non-compliance.

And finally: Don’t become emotionally involved with your property; no one will look after it as well as their own home; so don’t be upset with the state of the property at the end of the tenancy.

In conclusion: when letting your house out, our recommendations are that you should consider:

  • consulting an Independent Financial Advisor for help getting the right mortgage.  You can find a list of IFAs here
  • engaging a reputable agent and having a formal tenancy agreement with your tenant
  • using a chartered accountant to prepare your tax return
  • having a solicitor briefed to help you in an emergency
  • opening a savings account with 6 months mortgage payments
  • checking out various ‘moving house’ related services at Oscar

 

Syzygy would like to acknowledge the help of Mike Frith of Oscar and letting agent Chris Scupham in producing this paper.  For more specific information please contact us at info@syzygy.org.uk.