If you are planning on living abroad, you may own property, which you have decided to rent out to tenants back in the UK. Here at Hancock and Partners, we provide property management services for many overseas landlords, who require a trustworthy estate agent to look after their property and tenants while living abroad. As a landlord overseas, you must decide how much involvement you want in your rental property, and many opt for a management service. Therefore, we have put together some tips for landlords living abroad who want to put a property management service in place, by working with a letting agent based in Chichester and throughout West Sussex.
Are you a non-resident landlord?
Property owners who let their property in the UK and spend more than six months in any tax year outside the UK, are considered non-resident landlords. If this is the case, you must pay tax to HMRC on your rental income through the Non-Resident Landlords Scheme. This is based on where you actually live, rather than your main or permanent home, so is still applicable for those who are classed as a UK resident. Overseas landlords will therefore need to complete an NRL1 form with HMRC to register their tax status as a non-domicile.
The scheme requires UK letting agents to deduct Basic Rate Tax from any rent they collect for non-resident landlords. A letting agent can be an estate agent, solicitor, accountant or friend, and these agents for non-resident landlords must pay the tax on rent to HMRC on behalf of the landlord. The only exception is if the letting agent has been advised by HMRC, in writing, that the landlord can receive the rent with no tax deductions. Furthermore, if the landlord is a joint owner, tax is paid on their own share of rental income.
If you work with a letting agent in Chichester, or elsewhere in the country, within 30 days of the start of the tenancy, your agent will complete an NRL4i form to register with HMRC as a member of the Non-Resident Landlords Scheme. Your letting agent will withhold 20% tax on rent received on your behalf and deduct this from your rental income, allowing for expenses, and provide you with a certificate at the year end. In the case that your property is not managed by a letting agent, the tenant is responsible for declaring the amount of rent they have paid to HMRC on an annual basis.
Make sure you plan ahead
If you are a landlord moving abroad, it is important to plan ahead by putting your tenancy and property management in place before you leave. Ideally, you need to appoint a qualified letting agent to manage your property while you are overseas. Unexpected delays can be stressful, so it is important to do this early to avoid the stress of running out of time before you move. Your mortgage companies and insurers also need to be informed of your plans as soon as possible, to ensure you won’t be breaching your terms.
Finding a good letting agent
When finding a letting agent, it is always advisable to find an ARLA Propertymark protected agent, who can provide a full property management service, not just a tenant introduction service. But what should you look for when finding a letting agent?
- Ability to find the right tenants
Your letting agent should be able assist you in finding a trustworthy, reliable long-term tenant for your property and run a thorough tenant referencing process. This can give you the peace of mind that your tenant(s) will pay your rent on time and look after your property, while you have the minimum down-time in earning rental income.
- Access to the right marketing tools
To be certain that the agent can cast their net as wide as possible in the search for the perfect tenant for your property, check whether they use all marketing tools at their disposal. These can include ‘To Let’ boards, nationwide property portals, websites, social media, printed media and their own database of tenant applicants.
- Prior preparation
The letting agent will prepare your tenancy agreement for you, and ensure an in-depth inventory is carried out prior to anyone moving in. Knowing the standard of the property at the start of the tenancy also helps to set clear expectations of the maintenance required by the tenant, establishing a good relationship from the start.
Your letting agent will also be responsible for placing your tenant’s deposit in a government approved tenancy deposit scheme, such as the TDS or DPS.
- Legal compliance
The letting agent will be able to assist you with legal compliance of your property, such as an updated EPC certificate, as well as gas and electrical safety certificates, smoke alarms and carbon monoxide alarms. This is especially important with the recent changes in landlord legislation regarding the electrical safety standards in privately rented accommodation.
Since 1st April 2020, landlords are no longer able to continue to let or begin to let properties with an EPC rating below E. The regulations also require you to have the electrical installations in rented properties inspected and tested by a person who is qualified and competent, at least every 5 years. At Hancock and Partners, we have recently published a guide to the recent changes in electrical safety standards, which highlights the new requirements in more detail for you.
- Property inspections
As an overseas landlord, you will want to be kept informed about your property and its current condition. This is something your letting agent will be able to manage, scheduling regular property inspections, informing you of any maintenance issues or tenant concerns following the visits.
Some letting agents can even provide virtual viewings, which allow the landlord to see their property’s condition at the end of a tenancy to discuss remedial works with the agent. Here at Hancock and Partners, we were the first lettings agent in Chichester to offer virtual viewings for prospective tenants and home buyers, allowing them to enjoy a fully interactive walk-through of their property, and this service can also be extended to our overseas landlords.
What will the letting agent need from an overseas landlord?
- Permission to complete repairs
Your managing agent will need to oversee the maintenance of your property and deal with repairs and emergency situations such as a boiler breakdown without having to gain permission from you first. They should have the ability to instruct a tradesman and approve quotes for repairs to a sensible budget limit, otherwise the repairs could take too long resulting in further damage and unhappy tenants. Quick resolution of maintenance issues is essential to keep your tenants happy and your property in good condition.
- Reliable contact information
As a landlord, you need to be easily contactable if there is an emergency. Your letting agent will be able to handle most things, but in the rare instance that they need to contact you, your updated home and work phone numbers, mobile numbers and email addresses should be provided. If you are going to be away on business or on holiday, your letting agent should also be informed.
- Overseas address
Although this is not included on your tenancy agreement, you need to provide an overseas address for the letting agent. The tenant must also have a UK address where they can serve a notice of leaving on your appointed agent.
What to consider when finding the best tenant for overseas landlords
- Do you need a long-term agreement?
If you are going to be abroad for more than a year, consider whether offering a longer-term tenancy agreement, such as one year rather than 6 months (with the possibility of renewal for a second year if both parties are happy), will help you to secure a long term, reliable tenant. Ask to see the tenant’s references, and if possible, meet them before you leave the country.
- Should you allow pets?
It is important to consider whether you should allow pets at your property. It might help secure a longer-term tenancy, but equally you need to feel confident that the tenant is not taking advantage of this and housing a small menagerie in your home!
Advice for landlords returning to the UK
If you are already an overseas landlord but are returning to the UK permanently and wish to live in the rental property yourself, ask your letting agent to serve a notice requiring possession of your property (Section 21 or Section 8). Just note that the agent only has the ability to serve the notice, but a solicitor must apply to the county court on your behalf.
On the other hand, if you are only returning for a short period of time, you can speak to your agent about arranging a visit to see your property. This will provide you with the peace of mind that your property investment is well looked after but do try to give both the tenant and agent plenty of notice.
Would you like to find a letting agent in Chichester?
If you would like to find a professional letting agent that can manage your property whilst overseas, please do not hesitate to contact Hancock and Partners. Our experienced team of letting specialists can help you find the perfect tenant and support you whilst you are out of the country. You can call us on 01243 531111 and a friendly member of our team will be ready to offer advice based on years of experience in the local area.