Renting out ones' UK property

[Turnip]

I am considering renting out my UK home and renting in France in order to search for a  French retirement (poss. B+B)  property ( In a village small town/small garden). I do not require a job (retired civil servant).

Being nervous at the prospect of renting out my UK property I ask if anyone here has experience of renting their UK property whilst living in France. The ideal position would be to keep my UK home whilst living in France but I cannot afford to do so. Therefore, I intend to retire to the Dordogne area (Green Perigord) and eventually sell the UK property. Another idea would be to take a deep breath, sell the UK house and go to France with the cash to buy when a suitable property appears.

Your opinions and experiences relating to making the transition to a new life overseas would be most welcome.[8-)]

[Gardian]

Turnip ..............

You've posted twice on more or less the same subject, but I'll try to respond on the one that more closely fits my own experience, albeit some years ago.

Mine wasn't a situation of renting out whlist living in France, but I was far enough away from the property that it might as well have been.  I used an agent - many would perhaps see that as a waste of money, but it had two clear advantages.

1. Continuity and legality of the let: over the space of four years, I had just two 'lost' months of letting in between three different tenants, with no difficulties whatsoever re moving people on (not that it was needed). 
2. The assurance of knowing that regular inspections would take place and that anything that needed doing would be taken care of at a reasonable price (any decent letting agent employs their own maintenance man who will sort out the little jobs that need doing to a property from time to time - you simply don't need the hassle of sorting that sort of thing out when you're inaccessible).

In short, peace of mind and a more-or-less known income.  However, you shouldn't budget on 100% occupancy and accept the 'wear & tear' element  - be prudent in all your calculations.

Remember too that you would be liable for tax in France (as a resident) on your UK letting income: there could well be other tax implications, but the tax experts on here will advise on that within nanoseconds!!  Do all the numbers stack up?  Only you know.  

 

[Will]

No problems for us - not even tax ones. Well, one - as a regular visitor to England it didn't make much sense to have a house there that we couldn't use, so in the end we sold it and bought a smaller one with no mortgage etc.

The only thing you have to watch is capital gains tax. If the house was your principal residence, and you sell it within five years of it ceasing to be your principal residence, you will escape UK CGT. Do keep an eye on the changes to the double taxation agreement between Britain and France though, because you might have to pay the equivalent tax in France - I am not sure on this one, so I hope somebody who knows French taxation inside out can clarify.

I would say that rather than being a waste of money it is essential to use a letting agent when you are in another country. You don't want to have to arrange maintenance etc remotely or have to pop back when the boiler breaks down.

[Llwyncelyn]

Gardian and Turnip have very much covered all the questions you have placed but here our personal experiences.

We sold our home in the UK and as Will indicated bought a smaller house that perhaps long-term would not have been our choice for our own personal living.  Indeed in two years we have only been in it for ten minutes!

However its location is great its a nice house near the Town Walls.  Three bedrooms two receptions that sort of thing and at least its ours.

It has been rented from the day we bought it and so far no problems same tenant , good tenant.

We too used an agent that we have known for over thirty years they do inspections organise tradespeople that sort of thing and every month by BACS transfer send us the rental income.  We do not even have to think about the property.  Insured it with a specialist insurance company.

As Will says income has to be declared here and in the UK its paid gross.  Use a wonderful English speaking Accountant at Avranches and who is very much 'old school' a gentleman and does work for the Court d'Appel at Caen.  He is well connected and has 'his way' with d'Impot.

However our purchase in the UK was to ensure that we had an entry system back home and we are not 110% sure of our continuing involvement with the UK so its a buffer and a safeguard.  We would never sell it unless of course we moved back and then we would sell both the French and the UK house augment the funds and say move to West Bay near Bridport  or thereabouts.  I just love Dorset but from Wales

 

rdgs

[Val_2]

We let our house for the first five years of being in France and would NEVER do that again. This was done through a very professonal letting agency who we knew personally as well through selling other property with them but the "professionals" who rented our house were just dirty filthy pigs and practically wrecked it. My husband had to go back and sort it out and eventually the agents paid to have the place professionally cleaned through but it made us put it straight on the market and get rid of because it was coming upto the time of perhaps replacing the boiler, the windows and other expensive items. Each year here we had to fill in UK IR forms with details of monies received etc and pay for the compulsory plumber to inspect the boiler and make sure no fumes,plus any other repairs etc that cropped up. OK we may have made a profit each month but not enough to plough back in especially as there was still a mortgage to pay out of the rental. If you can find a decent renter and not a series of people coming and going every six months then rent it out until you know whether you will stay definately in France which is usually about the third year and then sell it but if not sure, then use it as an escape just in case its not what you envisaged living here.

[Llwyncelyn]

Dear Val of course you had a bad experience and hence the use of upper case in emphasising the point.  However as it all things there are good bad and indifferent experiences.  Indeed some of us would have excellent experiences and some dreadful ones.

I am not sure why you had to fill in IR forms for our rental income is payable gross and we just declare it here. 

Again of course I take your point as to 'margins' between mortgage and rental income but that again depends upon the amount of the mortgage and thus the higher that figure the lower the 'margin.'  No mortgage or a minimal mortgage then the greater the 'margin.'

Finally there are those in the UK who make a very good living out of rental property and that despite all the overheads.  You may find this suprising but I know a retired Solicitor and who has over 600 houses rented out yes in not so good areas of a Welsh city but still...........

Val have you overlooked in your calculations the capital growth in the property for that is very much part of the scenario and in two years we are showing on paper a capital growth of over 21%.  On paper yes and it has to be achieved but being somewhat hardhatted when we bought with cash we were able to effect a good deal. Please do not think I am a captalist by nature I am not its just that like all of us we have worked hard and when buying say a house I do adopt a rather tough approach.

I do however very much agree with you in respect of the 'escape' mechanism and once more I would confirm that we will never ever sell our UK property.  Obviously France may not work out say one of us dies then the other may not wish to spend the rest of his or her life in France thus back to the UK.

Here a story and off track but quickly  ...........when we first started renting here in France and ahead of moving permanently a fellow Welsh guy telephone me and said that he would take the house for a week in the summer but as we only had two mountain bikes in the shed one of the conditions was that we had to buy two more for there were four people in his party!

[Will]

I think you get good and bad tenants wherever you are - having seen (even bought) French houses which have been rented out to other French, I know they can be just as filthy and disrespectful of others' property as any English tenants. And just as bad at paying, too.

[AnOther]

We are about to make the move (completing French purchase later this month) and although not absolutely compelled to are selling our UK property.

It's an 18th century cottage which we have totally renovated over the last 20 years and are obviously somewhat emotionally attatched to but security and insurance considerations apart, leaving such a property standing empty would be very highly detrimental for it and as for renting, it the type of property which needs a level of ongoing TLC which I'm afraid the best tenants in the world would be unlikely to give it to so this is not really an option for us either.

In terms of a UK "bolt hole" then, as it's often (somewhat pessimistically I feel) termed, we are considering 2 or 3 options.

One is to pay for the building of an annex on our daughters house where there is adequate space and planning permission shouldn't be a problem.

Another is to put some money towards our son and his partner moving to another property either with a "granny annex" or again, with space to build one.

Thirdly, we are looking into possibly buying a park home which by definition would be safe and secure and more suitable for occasional use albeit many prohibit year round occupancy.

The broad plan at the moment is to get the move and sale of the UK property out of the way then when the dust has settled see exactly what cash assets we're left with which will determine how long I continue working in UK (2 week away - 3 weeks France or already 60% retired as I like to describe it!). We will then be in a better position to decide when we can pin the big "R" for retirement on the calendar.

We anticipate between 2 to 3 years when we will both still be under 60 and have sufficient cash and savings to comfortably see us untill 65 when the pensions kick in.

  

[Hoddy]

I'd counsel against doing anything that left you in some sort of joint property ownership with your children. In our family we've had a couple of extremely acrimonious divorces ( I suppose they're never pleasant ) where the division of assets has been a major problem. I shudder to think what might have happened if, in either case, there had been another 'joint' owner of the property.

Just my experience. FWIW

Hodd

[cooperlola]

A very sad story but an apposite one, I think.  A couple of very dear freinds of mine had always dreamed of having a house in the country where they could keep their horses, but could never quite afford the right place.  Along comes daugher, husband and three children and says, "why don't we pool our resources and buy a house together?"  They find the perfect property, divide it up so Mum and Dad have a couple of rooms, then everybody moves in.  The property is in the daughter's family's name, so that they can avoid hefty inheritance taxes.  For a year or two things go fine but having aged parents in the house proves to be an increasing strain - although they make great child minders.  After 5 years, the relationship between father and son-in-law has deteriorated to the point that they no longer speak to one another.  Father is also becomming increasingly infirm so the ponies have to go.  Now, the mother and father are stuck in a house in the middle of nowhere, only she drives and even for her this is becoming more and more of a chore.  Son in law is making plans for an extension to the house and has not involved his parents in law in any of the details.

My friends both worked all their lives to have a nice comfortable retirement and now they have nothing but a couple of rooms in a hostile environment.  I realise your situation is different as you will retain a propery in France but as said above, do beware Ernie, even the best relationships can go sour, especially when "in-laws" who have fewer emotional ties to you, are involved.

[Patf]

Our house in UK is let out through an agent. He takes 10% and seems to look after it well. Apart from the first 3 months, the same group of people have lived there 5 years. They work at the nearby hospital and if one of them leaves they find another. The income from it is almost half of our total income so very useful. We pay the tax in UK of course. We have no regrets up to now. Pat.

[Pads]

Turnip

A few years back now we decided to rent our house out for a year while we went travalling, We went down the route of renting out rooms in stead of the house, as we had 3 bedrooms we rented 2 out and kept the 3rd one for our selves (even through we wernt there) which gave us an option to come back if we needed to. We didnt use an agentcy but instead went through our local hospital where there were a number of new nurses and doctors looking for tempory housing, We were very lucky and had decent clean people who looked after the place well, So well in fact and we were making good money from it that we never went back to that house again, Instead on return to England we brought a Narrow Boat and lived on that for the next five years until we sold up and moved to cornwall.

Back then if you rented rooms out instead of a whole house the tax on it was a lot less , check that out through because that may of changed over the last few years.

Although if i was in your situation , I would want to have the money sitting in the bank ready to move when you find the house you want in france.

When we move to france our plan is to sell this house and to bye a 2 bedroom flat near here  where again for the first few years aleast we will rent out one room on a flat share basis, so we have some where to stay on visits to the uk. and have a foothold on the market here in case we do ever decide to return.

Good luck in what you do [:)]      

[Val_2]

Well the three people who rented our house and it was in a lovely condition when we left it, were two specialist professional nurses and an estate agent,but you had to see the mess they left to believe it, my sister was in tears as she had helped us decorate it beforehand. I am talking about 12 years ago now so things may have changed and back then there wasn't a lot of profit to be made as it was  "pre-mega price for rentals and sales".

[AnOther]

[quote user="cooperlola"]A very sad story but an apposite one, I think.....[/quote]A sad and salutory tale indeed and your friends have my sympathy.

I'm quite aware that however well you get on with close family and in-laws this sort of situation can be so easy to end up in.

These are just ideas we're kicking around anyway and any firm decisions are at least a year or two away.

[cooperlola]

[quote user="ErnieY"]

[quote user="cooperlola"]A very sad story but an apposite one, I think.....[/quote]A sad and salutory tale indeed and your friends have my sympathy.

I'm quite aware that however well you get on with close family and in-laws this sort of situation can be so easy to end up in.

These are just ideas we're kicking around anyway and any firm decisions are at least a year or two away.

[/quote]I could tell from your avatar Ernie, that your eyes are firmly open! (Can I borrow you to sweep my chimney, btw?)

[AnOther]

Absolutement...but I like to pulled up not dropped down as it keeps my feet clean.