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What Every UK Landlord Living Overseas Should Know

Sunday, 22nd August 2010

Categories: Lettings Property Management

Author: Peter Barry

So you’re letting a property in the UK while you’re living abroad.  In a perfect world, the property would be let to a marvellous tenant who pays their rent early, you never have to spend a penny on maintenance, and when you come back everything is exactly as you left it.

In the real world, things are seldom perfect.  However, appointing professionals to let and manage the property, should make it as trouble free and painless as possible for you.

There is a lot to think about when you’re letting a property.   Landlords living overseas will need to consider some additional points when renting a property in the UK:

  • Management- Who will look after the property and the tenants?
  • Tax- Has a NRL1 form been completed?
  • Address to serve notice- Do the tenants have an address in England or Wales to give Notice’s to.

Landlords can choose to manage the property themselves whilst living abroad however this can prove impractical.  It can make communication with the tenant more difficult, especially if there is a time difference between the two countries, and can result in delays for repairs and frustrated tenants.

A professional management company will make the experience as straightforward and as least problematic as possible. Good management of both property and tenant is the key to a successful letting. 

Peter Barry promote and facilitate a three way relationship between the tenant, the landlord and ourselves.  Establishing a good relationship from the start is far more likely to result in a much longer tenancy.

If you are about to become an expat Landlord, make sure you and any other registered owners who will be abroad during any tenancy periods, complete and return the Non- Resident Landlord (NRL1) form.  This can be done before you have a permanent overseas address.

HM Revenue and Customs should give an approval number for exemption of deduction of tax at source from the rental income.  Please note HM Revenue and Customs at their discretion can withdraw this number at any time.  In April 1996 the Legislation under Section 42A Income Tax and Corporation Taxes 1988 came into effect.  This means that your Managing Agent must account for tax at the basic rate (currently 22%) on UK rental income if you are a landlord whose main residence is outside the UK (a non-resident landlord).

If HM Revenue and Customs grants approval, from the date approval is granted, your Managing Agent will be entitled to pay over rents to you deducting any tax.

If you have not been granted exemption from tax deduction at source, your Managing Agent must pay HM Revenue and Customs the basic rate of income tax, collected on your behalf on a quarterly basis.  The calculation of tax paid by the Agent will not take into account mortgage interest, wear and tear allowance or other tax deductible items that are not paid on your behalf.  The eventual liability for tax may therefore be less than the amount forwarded to HM Revenue and Customs. Any over payment will have to be reclaimed at the end of each year by submitting a self-assessment tax return to HM Revenue and Customs.

If you’re living abroad you should be aware that your tenant must have an address in England or Wales for them to serve notices to.  This is required under Section 48 of the Landlord and Tenant Act 1987.

You should be able to tell if your tenancy agreement with the tenant contains the necessary information as required by the Act if it lists an address in England or Wales where the tenant should serve any notices on their landlord. It may or may not quote the specific legislation.  If you are unsure whether your agreement contains the appropriate clause, you are advised to seek legal advice.

With Peter Barry, Tax and Notices are all taken care of, leaving you to get on with your life overseas.