By Colette Browne, www.propertygarden.com
How do I do it?
- Write a plan
- Start six months in advance
- Sell or let your home
- Your mortgage
- Write a contingency plan
Selling
Advantages
- Leaves you worry-free
- Invest the money in a high interest account
- The selling up process can be very purging
Issues
- You are now homeless
- House prices may rise faster than your interest
- Costs of re-buying can add up
Letting
- Can be a lucrative option
- Tenants may cover the mortgage, bills and even provide an income
- However – rental income is taxable!
Letting – telling your mortgage lender
- Check the small print and terms and conditions
- Consent is usually given for less than 2 years
Letting – finding tenants and a decent agent
Must obtain:
- Bank references
- Character references
- Watertight tenancy agreement
- Letting to a friend may seem like a good idea, but friendships can suffer
You can also rent through a reputable agent, but this will incur extra costs
- 5 - 10% of rental income for finding a tenant
- 5% plus VAT for the management fee and rent collection
- The safest option
- Better market rate
Letting – a decent agent
- Invite at least three to your house
- Two-way process
- What would they be like if you “fell out”
- Or could they handle difficult tenants
- Don't go with the agent that quotes the most rent
- Check they are well established
- Start looking 16 weeks before leaving
Letting – safety issues
- Your house must be safe
- Gas appliances must be checked by a CORGI engineer
- Electrical equipment must be tested
- All upholstered furniture must be fire resistant
- Agents will normally charge a fee
Letting – tax
- Tax will be deducted at source from your rental income
- Normally basic rate
- Renting out for a long time you may be liable for Capital Gains Tax – but if you return and live in your home you may be exempt
- Check with a tax advisor
Letting – redecorating
- This will ensure better rent
- The agent will suggest ways
- Corporate let will need to be decorated accordingly
Letting –
removing items of value
- Remove anything irreplaceable or sentimental
- Assume worst case scenario
- Check insurance
Letting – furniture storage
- Only have to remove a few items
- Maybe leave at a friend's house
- Or leave unfurnished and put in storage
- Shop around
- Safe deposit boxes
- British Association of Removers
Letting – inventory
- Essential for avoiding potential conflict
- Can do yourself or get an agent to do it
- Be meticulous
- Makes and models of cookers etc
- Every mark and blemish
- Take photos
Letting – building and contents insurance
- Specialist insurers
- Premiums 10 - 20% more
- Speak to an insurance broker
Letting – tenancy agreement
- This is the key safeguard
- Make sure it is done properly
- Through your agent
- Minimum period/notice period
Letting – rent
- Usually 1 month rent in advance
- Plus 2 months deposit
- Put this in a high interest account/agent keeps it for you – insist on interest
- Insist on a standing order or direct debit
- Insurance – 10% more for safeguard – easier to get legal insurance through your bank account
Letting – utilities
- An agent will switch all the bills for you
- If you leave them in your name you are at risk
- Telephone – insist on keeping your number?
Letting – inspections and repairs
- A managing agent will normally do this
- Refer to your contract
House sitters
- Are you sure – you are allowing someone to use your home as theirs
- Live with them first
House swaps
- May be an option
- Home occupied + accommodation and maybe a car
- Be cynical about everything
Finally
Enjoy your trip!
