Is it worth letting my flat out (Scotland)

[DoricPixie]

I have been offered the opportunity to work overseas with the same company I work for now. I am trying to decide if it's worth letting my property out.

Realistically I can get £550pcm for my flat in Aberdeen. My mortgage lender will increase the rate by 1% if I am given consent to let making the monthly interest £456 by the time I am ready to let, decreasing each month as I pay off a little more of the capital.

Income tax shouldn't be an issue because I will be non-resident for the most part and the rental income will be my only Scotland/UK income.

Then there is landlord insurance plus I will probably have to pay a letting agent to manage the property. My parents said they would do it but I don't think that's realistic since they live 160 miles away from the property and I wouldn't really want to place that burden on them.

I will also have to factor in voids, gas safety certificates, covering the place with smoke detectors and a heat detector in the kitchen, landlord registration, electrical safety tests, etc.

The two reasons I don't just sell are a) I do intend to return to the property at some point and b) it's in negative equity so I would have to stump up about £20k+ in order to sell it and the property market here doesn't necessarily follow the trends elsewhere in the UK or even Scotland. I don't want to be in the situation where I've sold low and have to buy high again depending on when I return.

I know consent to let won't last forever so I will have to consider an ex-pat BTL at some point meaning I will need to have enough to clear the negative equity and put down a large deposit. I should be able to afford decent overpayments to my mortgage in the next 2 years plus I have a couple of other investments maturing during that time.

Would you bother to rent it out? I don't really want to leave it unoccupied for years, it wouldn't be good for the flat, my insurance or in terms of council tax although I think my mum likes the idea of having a pied a terre somewhere. On the other hand it's still going to cost me money even if I rent it out.

[MdeB]

Have you workd out how much it will cost you if you don't le it out and if you do?

[JK0]

I don't think you can get tenants out unless they stop paying the rent in Scotland now. If you want to return, let mummy have it as a pied a terre.

[boletus]

I don't think you can get tenants out unless they stop paying the rent in Scotland now.

You can if you intend to live in the property or sell it.

If you want to return, let mummy have it as a pied a terre.

Agreed.

[DoricPixie]

Have you workd out how much it will cost you if you don't le it out and if you do?

I have estimated the costs of each option. If I'm only away for 2 years then it doesn't seem worth the hassle of letting the property even though I'd have to pay 100% council tax for the second year. If I'm away for 5 years then keeping it empty is a luxury and I would be better of letting it.

[DoricPixie]

I don't think you can get tenants out unless they stop paying the rent in Scotland now. If you want to return, let mummy have it as a pied a terre.

I checked and returning to live in it and selling the property are grounds for eviction with the PRT in Scotland.

The pied a terre comment was tongue in cheek. My parents live in a village with crap transport links so my mum enjoys the novelty of being able to walk to the theater and restaurants.

[Flashback1966]

Your situation is not clear cut. What is the condition of your home? Can you get quality tenants?

What if the tenant did not look after it and you needed to re-fit a new kitchen and bathroom on your return? Can you do the building work yourself or do you need a builder to do it?

So renting a property for £6k and for it to need £12k of renovation a year later does not make sense.

As a good landlord, you need to have an agent, who will deal with property issues.

Have you worked overseas before? May be try it for a bit, before committing. May be you get home stick?

Also, letting agent are meant to collect and pay the tax on your behalf. However, I don't know if they they deduct the cost of other expenses such as repair or say insurance etc....

As an option, may be you can rent out a single room.

[DoricPixie]

Do you need to use an agent in order to be a good landlord? I'm sure there are plenty of good landlords out there who choose not to use a letting agent. I'm not saying I won't use one but in my experience as a tenant, the use of a letting agent guarantees nothing in terms of whether the landlord is good, bad or ugly. Does the letting agent pay the tax on my behalf? I'm positive it would be up to me to self assess and pay the tax accordingly.

The condition of my home is good. It used to be rented out before I bought it and was very tired looking so I've spent the last 4 years modernising it. I think it would attract decent tenants given the condition and location but I'm sure every landlord tells themselves that.

I don't think renting out a single bedroom would work. I would be just as well renting out the whole property because I would get more rental income that way and a careless tenant renting one room would cause just as much damage as a careless tenant renting the whole property.

[boletus]

Does the letting agent pay the tax on my behalf? I'm positive it would be up to me to self assess and pay the tax accordingly.

https://www.gov.uk/guidance/paying-t...ndlords-abroad

Also see NRL1

[jpkeates]

Do you need to use an agent in order to be a good landlord? I'm sure there are plenty of good landlords out there who choose not to use a letting agent. I'm not saying I won't use one but in my experience as a tenant, the use of a letting agent guarantees nothing in terms of whether the landlord is good, bad or ugly.

If you're not in the country, getting tradesmen to fix simple problems is quite difficult, just as a practical issue.

Does the letting agent pay the tax on my behalf? I'm positive it would be up to me to self assess and pay the tax accordingly.

If there's no letting agent, the tenant will have to deduct basic rate tax from the rent they pay, complete a (simple) bi-annual return and send the tax deducted to HMRC.

[DoricPixie]

There is a company of tradespeople I already use and they have a service where landlords can have a set of keys kept in the safe to be used when maintenance and repairs at the property are required. What I’d really need to use a letting agent for is helping find and tenant, check in and check out.

In terms of tax I thought I could opt to have the rent paid to me without income tax being deducted so that I sort out the tax myself. I’d rather pay HMRC when the money is due rather than over pay and try to get a rebate.

I think what what I might do is go out and give it 6 months. Then revisit letting the property out if I think I’ll be there for more than 2 years.

[jpkeates]

What I’d really need to use a letting agent for is helping find and tenant, check in and check out.

The issue with that is that the agent and your incentives are not aligned.
You want an amazing tenant who looks after the place, pays tent on time and stays for as long as possible.
The agent wants tenants who don't stay long and they don't care how good they are because it doesn't cost them anything if they're demanding or lax.
The agent benefits when the tenancy starts, so they won't be zealous in checking every detail, the faster the tenancy starts the sooner they get paid.

In terms of tax I thought I could opt to have the rent paid to me without income tax being deducted so that I sort out the tax myself. I’d rather pay HMRC when the money is due rather than over pay and try to get a rebate.

You might be able to get HMRC to agree to that, but it's not usually their chosen option.
It's not up to you, it's up to them, and they prefer their money sooner and to repay you any overpayment.

If you're never actually going to have any tax due, because the income will be far below your tax free allowance and it will be your only taxable income, they might agree simply because otherwise they have admin and no tax revenue.

[DoricPixie]

I was thinking of making one of these applications....


https://www.gov.uk/government/public...dividuals-nrl1

[DoricPixie]

You're right about the letting agent. My goals and theirs may not be aligned.

[MdeB]

If there's no letting agent, the tenant will have to deduct basic rate tax from the rent they pay, complete a (simple) bi-annual return and send the tax deducted to HMRC.

There is an interesting article on this here: https://nearlylegal.co.uk/2019/09/hm...landlords-tax/