Many expats rent out their UK properties instead of selling them when they move abroad. This can provide income, make sure they have a base to return to and make it easier to obtain further mortgages later on.
It can be tempting to cut out the middle man, find tenants and manage the maintenance and rent collection yourself – thus saving agency fees.
Are you buying a property to develop it and let it out?
The drawback is that dealing with tenants and maintenance issues directly can be stressful and time consuming. It’s an even bigger hassle if you happen to live in a different time zone.
In addition, when tenants move out, inventories must be carried out, repairs done and the return of the deposit negotiated.
“Having to manage contractors from a distance is tricky, and your visits to the property itself to check on the tenants and the property will be limited.”
What are the unexpected costs of being a landlord?
“In most cases DIY landlords will have to use an agent or a website to find a tenant, which will still cost them. The only reason I am able to work on this basis is having good friends and family living near my property who help out with checking the property and organising maintenance.”
You need to pay tax on your rental income if you rent out a property in the UK.
You may also need to pay tax if you make a gain when you sell residential property in the UK.
If you live abroad for 6 months or more per year, you’re classed as a ‘non-resident landlord’ by HM Revenue and Customs (HMRC) – even if you’re a UK resident for tax purposes.
What are the best ways to deal with rent arrears?
How you pay tax
You can get your rent either:
• in full and pay tax through Self-Assessment – if HMRC allows you to do this
• with tax already deducted by your letting agent or tenant
• Get your rent in full
• If you want to pay tax on your rental income through Self-Assessment, fill in form NRL1i and send it back to HMRC.
• If your application is approved, HMRC will tell your letting agent or tenant not to deduct tax from your rent and you’ll need to declare your income in your Self-Assessment tax return.
• HMRC will not approve your application if your taxes aren’t up to date, eg you’re late with your tax returns or payments.
Get your rent with tax deducted
Your letting agent or tenant will:
• deduct basic rate tax from your rent (after allowing for any expenses they’ve paid)
• give you a certificate at the end of the tax year saying how much tax they’ve deducted
If you don’t have a letting agent and your tenant pays you more than £100 a week in rent, they’ll deduct the tax from their rent payments to you.
Please contact Pelin Martin to book a 30-minute free property consultation on