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Renting property ‘a safer option’ for UK expats
Richard Way says renting may be the safest option for UK expats

Renting property ‘a safer option’ for UK expats

Brits wanting to move overseas, may find renting rather than selling their UK property is a more secure option – and they should also be aware of the effect of exchange rate fluctuations, says overseas property journalist, Richard Way

For many UK expats wanting to move abroad, renting out their property could be a safer option than selling up, advises a market expert.

Renting provides a steady income and means that expats still have the security of owning a property in the county, if they suddenly need to return, especially in the case of older people, says Richard Way, Editor of the Overseas Guides Company (www.overseasguidescompany.com.)

“Conditions in 2014 mean investing in a UK buy-to-let could be the safest way for Brits retiring abroad to keep hold of a sterling-based asset and boost their monthly income.

“It’s not only Osborne’s changes to the pension rules that could encourage more pensioners to invest in a rental property with their pension pot – as opposed to buying an annuity, or other investment before moving abroad. Later this month, a hike in rental demand in the UK is expected, when new regulations governing the granting of mortgages are introduced.”

The Mortgage Market Review – which comes into effect on April 26th – means the conditions for securing a mortgage are set to get tougher and more people could be forced to rent their home until they can satisfy the new conditions for a mortgage.

“From our experience at the Overseas Guides Company, keeping a rental property in the UK is a popular way to subsidise an overseas retirement and keep a foothold in the UK. It’s not unusual for expats to return to the UK for healthcare reasons when they enter the latter stages of their retirement, while many feel reassured having a UK asset to pass on to their family. It’s easy to see why buy-to-let is an increasingly preferred option with expats.”

At the same time, Mr Way warns those living abroad to fully understand the effect that changing currency rates might have, including in Australia, where the pound hit a long-term low against the dollar.

“Headlines about the benefits of emigrating to escape the UK’s poor economy and job market could be misleading for the average Briton, especially those who fail to do proper research into their preferred destination and costs before leaving.

“A combination of a weak pound and high cost of living mean that these days emigrating to some countries can be more of a luxury than an option for the average British person.

“Take Australia – where the Aussie dollar hit a 28-year high against the pound last week and the cost of living – particularly in cities such as Sydney and Melbourne, is now ranked amongst the most expensive destinations in the world.

“For a British nurse or teacher, for example, emigrating there and taking funds to invest in a new home with them, careful financial planning and the weighing up of costs have never been so important to ensure they really can afford the new life they dream of.”

* The UK’s new Immigration Bill has been amended, to ensure that landlords of purpose-built student accommodation will be exempt from conducting immigration checks on tenants.

The Bill, which could enter into law later this year but not be in force until 2015, will require landlords to obtain more comprehensive tenant references and conduct frequent checks on their immigration status. This new legislation puts a large responsibility on lettings agents and landlords and they could face a fine of up to £3,000 for each adult found to be staying illegally in a rented property.

Any tenant who cannot prove they are a British Citizen, a national of a European Economic Area state or a Swiss national, must have their immigration status verified before they can be offered any kind of tenancy. Anyone who does not have the right to remain in the UK must be refused, whether they are named in the tenancy agreement or not.

Landlords or agents will need to show that they have made a reasonable effort to check tenants and to make sure the property is not inhabited by someone other than the declared occupier.

The changes comes after the British Property Federation (BPF) tabled an amendment on the grounds that international students go through rigorous visa checks before being accepted by a university and requiring landlords to so the same would be a duplication.

Ian Fletcher, Director of Policy at the British Property Federation, says, “We are very satisfied to see that our amendments to the Immigration Bill have been accepted. The time and resources that would have been spent by student accommodation providers carrying out these checks would have been completely wasted.

“If we want to see the UK’s higher education sector competing on the global stage then we need to make sure that we welcome those from other countries who want to study here, not make it more difficult for them.”

Michael Portman, Managing Director of LetRisks, says although it may take up to two years to bring into force, agents and landlords will meantime need to prepare for the changes.

“We do know that almost one in five tenants do not want to share their immigration status with their landlord, according to the latest tenant index from the National Landlords Association (NLA). Under the new legislation, would-be tenants will have to produce evidence from a checklist of documents that they have permission to be in the UK and landlords will have to take a copy for their records.”

“Putting the onus on the tenant to declare their status and agree they are not in breach of the rules, perhaps by adding a clause to a tenancy agreement, will not be acceptable as a defence if the landlord or agent knew the tenant would be in breach of this term, or if they did not attempt to independently verify their status.

“If the tenant is allowed to remain in the property, the landlord or agent could face a fine. Subsequent checks will need to be made on the tenant at the end of the eligibility period, which is the longest of either one year following their latest checks, the remaining time they have leave to stay in the UK, or the time remaining on a valid immigration document issued to the tenant.

In addition, landlords and agents will have a duty to carry out periodic checks on tenants who have limited leave to remain in the country. “There is a great burden for agents and landlords, but good reference checks at the start of a new tenancy, will give landlords and agents the necessary information to make an informed decision on a tenant’s application.”

Howard Lester, Lettings Director at Balgores Property Group, says one concern is that if a tenant has friends staying who are staying illegally in the country, this could result in a landlord or agent being fined even although they could not reasonably be expected to check on something like this.

He also believes it is unclear what would happen if a tenant’s visa or permission to be in the UK expired during a tenancy. He wants to know if there will be a speedy process to evict the tenants to avoid the agent being responsible.

By Adrian Bishop, Editor, OPP Connect

 

 
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