Overseas landlord – how do I manage my rental property?

According to the Office of National Statistics, every year, over 200,000 of us Brits choose another life abroad and with an outlook for 2009 looking pretty grim, don’t be surprised if the next set of statistics looks even higher.

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The big question is, “what do we do with our house when we move abroad?”

Traditionally, most emigrants would decide to put the house on the market for sale however, with current house prices on the slump and difficulties in getting a mortgage, sellers are opting for rentals instead.

If you have never rented out a property, the thought of it can be daunting – moving abroad and renting, for most people, would be out of the question.  But don’t stress, it is not as hard as you may think.

You have two choices as to how you will manage the tenancy agreement.  You may choose to manage the agreement yourself, or enlist the services of a local managing agent.

Using a Letting Agent to Manage your Property

If you have opted for using a letting agent to manage your property, they will be responsible for the day to day dealings with your tenant.

This would include the following minimum requirements:

• Finding a Tenant in the first place
• Drafting up a Tenancy Agreement and carrying out a credit check
• Ordering an EPC if required
• Checking the Tenant into the property
• Carrying out quarterly inspections and reporting back by email / post to the landlord living abroad
• Maintenance and repair work
• Arranging payment of tax on behalf of the landlord
• Checking the tenant out at the end of the agreement
• Dealing with any legal issues such as non-payment of rent etc
• Re-marketing the property to find new tenants

Most agents would charge a one off payment PLUS and ongoing percentage of the monthly rent.

The initial payment would be for the marketing of the property, drafting the tenancy agreement, setting up standing orders and arranging the changeover of utilities etc.  This one off payment can range from £200 – 75% of the first month’s rent.

The monthly percentage would range from 8% - 18% (more expensive within the M25).

These fees are normally negotiable!

Manage the Property Yourself

If you choose the second option, and that is to manage the property yourself, you could potentially save an average of £1000 over a 12 month agreement however, you are advised to know a little about the legal aspects of residential lettings such as:

• According to Section 48 of Landlord and Tenant Act, you must give your tenants a local contact address in the UK as an address that they can use to issue notices to you.  This could be a friend or a member of your families address.
• Keep an eye on the rent payments – if your tenants are either consistently late with rent payments or they are over 8 weeks behind, you may be able to issue a specific legal notice to evict.
• You must supply the Tenant with a Gas Safety Certificate before they move in and it must be updated annually
• You must supply the Tenant with an emergency number so that they can contact someone for help after hours.
• Register with HMRC and declare any income on rental property.

There are a good handful of Landlord guide books available if you want to brush up on your legal knowledge of residential lettings.  It’s always handy to have one or two laying around just in case you get stuck.

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