Are You An Overseas Landlord? Tips To Rent Your Property In London

Are You An Overseas Landlord? Tips To Rent Your Property In London

The London property market attracts both buyers and renters from outside the country. This results in landlords who do not live in the UK. Sometimes, homeowners have to go live overseas but prefer not to sell their houses. People in this category include diplomats, crown servants, and members of the armed forces deployed abroad.

If you are in these categories of London homeowners, you are obligated to register in the non-resident landlord scheme.

What is the non-resident landlord, and what do you need to know aboutproperty rental if you are a London landlord living abroad? This article answers the questions and more.

What Is A Non-Resident Landlord?

If you own a property in the UK but live more than six months outside the country in a tax year, you are a non-resident landlord. It does not matter if you do not live permanently in one country abroad.

Companies registered abroad but having rental properties in the UK are also considered non-resident landlords. The UK does not accept a PO box or forwarding address in place of a properly registered business in this regard.

As stated earlier, all overseas landlords must register in the Non-Resident Landlord scheme. This is to allow the government to tax the income from renting out the property correctly. The objective is to collect the tax on the payment before it is sent to the landlord overseas.

rental properties

Should I Use A Property Management Agency As An Overseas Landlord?

As a London property owner living abroad, you can manage your property yourself from anywhere you are. You could also ask friends or family to manage the property for you.

However, going the routes above is very stressful, even though you will save on some costs. Finding, evicting, or replacing tenants from abroad is difficult. You also have to think about doing repairs and handling the taxes.

Asking friends to handle your property transfers all the stress to them, which could ultimately jeopardize your relationship. If they do not have experience managing properties, you only ask for trouble by placing your home in their care.

The best option is to use a property manager who will charge you between 10% and 15% of the rental income.

Insurance

Every London building is required to have insurance, regardless of where the landlord lives. For an overseas landlord, a rental property must have expat landlord insurance in place. If possible, arrange it before leaving the UK.

If you plan to rent out your property while living abroad, the Expats policy must cover rent arrears, potential legal costs when dealing with tenants, and malicious and accidental damage.

Rent Collection

If you plan to collect rent on your property while you live overseas, then you will need to find a way to convert the GBP to the currency of the country where you will reside. Changes in value currency could affect your income significantly. To protect your income, it is advisable to create an account with a UK currency transfer company instead of receiving the rent directly into a local bank account in the country of your residence.

Tax Matters

The income from your property is subject to tax even when you live abroad. This is why you must be enrolled in the Non-Resident Landlord scheme.

If your weekly rent is more than 100 GBP, your property manager must deduct the tax before remitting the income to you. In case there is no agent, the obligation falls on the tenant.

You can apply to receive your rent without tax being deducted. However, you are still obligated to declare it in the annual self-assessment tax return.

It is advisable to consult a tax adviser before deciding how to manage your London property when you are overseas. This is because your decision will affect how much time you are allowed to spend in the UK physically managing your property.

Mortgages

Having a mortgage on your UK home while you are abroad introduces some complications to property rental. You must explain your position to your lender to avoid breaching your contract and having the home repossessed.

Conclusion

If you too are living abroad and looking for more information on how you can rent your property, visit our website or get in touch with us for more information.

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Fees

Refundable Holding deposit

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Security Deposit

Capped at 5 weeks rent for annual rental under £50,000, or 6 weeks rent for annual rental over £50,000

Rent

The agreed monthly rent

Changes to tenancy

Capped at £50 inc VAT

Early termination charge

Not exceeding the landlord’s financial losses

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Interest of 3% above BoE base rate for each day the rent is late, once it is 14 days overdue

Replacement keys

Reasonable costs or give the tenant the option to purchase themselves

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