UK Landlord Forum / Life

Hello there,
I am a newbie landlord as we are moving to the US for a couple of years or even longer. We will be renting our house out while we are there. I have two questions and would really appreciate your input; first question is the top priority.

1. To minimise our involvement, I am considering the house to be rented out to the council. It is slightly below the market value but when you take into account of management fees etc there doesn't seem a huge difference. It will fetch around £1800 in the open market but the council's agent will pay £1500. They say the property will be returned in the same condition except for 'fair' wear and tear. I wonder if any of you have any experience or advice on this?

2. I have spoken to my bank and they're happy for me to let it out on the residential mortgage for 12months and they'll probably extend for another year. I only pay about £200 pounds in interest per month as I don't have much left on the original loan. I understand that the interest is tax deductible. Would you advise taking a BTL load to release some equity (which I can use to buy a property in the US if we decide to). Both UK and US will tax on my income as landlord so I'm trying to minimise as much as I can.

Many thanks in advance

Regards,
Eve

First recognise you will be by far a person of lesser bargaining power (legal access) than the council. So when the property is not returned to you in the same condition less fair wear and tear (the word fair is ambiguous at best) you will have very little opportunity to get a fair outcome.

Councils in general are not to be trusted.  They will happily tell a tenant to stay until the bailiffs come even when the tenant is in arrears.

Having said that you might be lucky and nothing goes wrong, but I have a private tenant that went in while I was abroad and he’s still there.  There was one period of time when he fell behind and it was quite daunting to have to try and face an eviction process when I was 6000km away.  I would consider the council process but really investigate it in detail.  They usually want specific works carried out beforehand etc.

The BTL interest payments are now only somewhat tax deductible so hardly worth considering in the maths (and even then not for long).  If you don’t know that then do some research.
US tax and treaties with U.K. are truly an unfathomable quagmire.  I work for a US company and we have Deloitte on contract to handle this and folks that have done a US assignment tell me even they struggle! So I would take with large pinch of salt for any advice from a forum.  There is a double taxation treaty between US and UK so whilst they both tax you, you only end up paying the higher tax (once).  I’ve been told (and no personal experience) the big ticket item is a capital gains election on your permanent return to the UK so I’d suggest you look at that as well as income tax.