[tigerlily]

We are thinking of NOT selling the house here in the states when we go. We are thinking of renting it for a while, and enjoying the income, until we make sure that NZ is for us. Is anyone else thinking of this?

[Diny]

Tigerlily

We are selling the house (well at least we're trying) but we are buying a smaller property here in the UK on a 'buy to let' basis.

This is mainly being done as an investment, property prices tend to go up more than they come down (present housing market an exception). It will also provide (after a while) abit of income each month from rent.

I guess it can be considered as a safety net too but it's primary purpose is as an investment.

Diny

[Moorf]

Whilst we sold our main property we have kept on a flat which we rent out - if you can do this and get income from the rental then it's a good idea until you cut the ties with the UK, in my opinion.

Having said that, as I bought my flat in 1989 it is returning a good profit (double the mortgage) and has no chance of slipping into neg/poor equity if the housing market crashes in the UK as it was bought for just 26K and now worth 110K !!

Remember to declare taxes relating to the income and ensure all maintenance, letting agency bills etc are all written off against tax.

And in the UK, not sure about USA, you will be liable for Capital Gains Tax when you come to sell (there are exceptions to this I think).

[SoCal Gal]

Hi Tigerlily,
We go back and forth on this one, selling our house in San Diego or renting it. We would be in excellent shape, equity-wise, but what if it is not for us? We could never live in California again, I don't know where we'd go? We have the house down in NZ already, but almost everyday I can't decide whether to fish or cut bait, isn't that how the saying goes? And, to make it all the worse for wear, not hearing anything from NZIS yet is killing my nerves....I think it will all be very clear once the permanent res. passport stamp is in place. That way, if we don't like one part of NZ where we are living, we'd probably just move to another part! Sort of like here!
We like it all in general, but some parts better than others. Hope this helps - or at least lets you know you're not alone in your dilemma!
:cool

[deebat]

Hi Tigerlily,

We're planning on keeping my condo in Portland for awhile for the very reason you mentioned. I've already moved into my fiancee's rental apartment so we can get accustomed to the idea of being members of the "landed gentry" (not sure if I'm using that term correctly here, but it sounds good, in any case). We'll see what it's like to have someone rent the condo for awhile while we're still here in the States; if it works out, we'll hang onto it when we move to NZ. (We're signed up with a real-estate management company, so we won't need to fly across the Pacific each time the toilet overflows. :nice1 )

Sure wish we were in Moorf and Woz's position, though -- getting double their mortgage on their flat :eek sounds too good to be true!

-Dan

[Moorf]

Yep, definitely get property sorted with a letting agency - ok, they take a commission but they also take ALOT of stress out of renting... I pay for the full management and it is 10% of rental income but I don't get bothered by any petty probs, they take the money and put straight into bank, they sort all the contracts, clean up between tenants, do 3 monthly property checks and they even do tax reports that go to my accountant.

I did rent out the flat off my own back once and ended up having to go through the courts to get a tenant out :eek

In the UK, you often need to have permission from your mortgage lender to rent out (unless you have a specific buy to rent mortgage). There are usually no problems (unless perhaps you are leasehold?) to them allowing you to rent your place out and my lender (Alliance & Leicester) charge £250 every 4 years to allow me to rent out....

[real_sunfire]

Moorf,

Otherwise you don't tell the mortgage lender that you are letting the house. *:) There is nothing in my mortgage conditions saying I can't and if you are doing it on a short term
basis I can't see it mattering. Opinions anyone?

I'm planning to rent out my house for 2/3 years when I come to NZ so at least I have somewhere to come back to should I not like NZ.

Rgds.,
Nick.

[sarahw]

Hi Tigerlily,

We did consider keeping our house but found we could live mortgage free in NZ if we did sell so I can study full-time instead of working and studying. :mrgreen: We felt that if we kept our home in the UK we'd feel like we weren't putting everything into our new lives in NZ and it would be too easy to pack up and come home. :(

That said, we have kept our foot in the property market elsewhere as we have a vacation home in Florida that we are going to keep - if we didn't have that I think we'd have bought a flat in the London area as an investment... That said, we'd probably move to Florida rather than back to the UK if things go wrong in NZ which I can't imagine they will. :angel

Good luck with your decision!

[Karoline]

Renting out in the Netherlands can be a nightmare: the renter is protected so much by law that you can't get him/her out. Also: in the Netherlands the house value devalues when it has been rented. When there are things broken in the house you are obliged to fix it as a landlord. A costly thing if you have to pay others to do it for you and you are not around to check if it had been done well. All reasons why i choose to sell my house. I don't want to have the burden of the morgage anymore and feel trapped by it. But no one has turned up for even viewing the house so far!!! :no If that is going to continue, we might be forced to rent out. I would also have to ask the bank for permission, because officially i am not allowed to rent out according the morgage contract. Even finding a renter you trust, may take a while. It would also be a disaster when the renter would suddenly leave (they can ofcourse) and i would have to pay the morgage myself again, while having no or small income in NZ....

[leslie]

hah! hub and i argue this one all the time!!! we are going to sell our house but still have live-work loft in london se1 to deal with. tax situ/ good tenant makes keeping loft attractive in sort term and the fact the area is perhaps going to be one of the cities best in another decade or so. so why do i feel absentee landlordism is such a big mistake??? gut says lose it. 9 times out of 10 gut is right. maybe when we get to nz the answer will be more obvious??? am rationalising that if prop sales aren't ab nec its just more stress noone needs at immig time.

as for foot-door bit... it is a tie and not stress free one either. real quandry with no obvious answer.

[Diny]

Regarding renting out your property without telling your mortgage lenders.

Abit of a grey area actually. A couple of months ago PB and I went to see a mortgage advisor to suss out a good deal for buying our 'investment property'. We automatically thought we'd have to go down the 'buy to let' mortgage road. However, when we asked the chap what was stopping us having an 'ordinary' mortgage he replied 'nothing really'.

Buy to let mortgages charge a higher interest rate and you need to put down a much bigger deposit (between 20 - 30% depending on lender). The only problem with going with an 'ordinary' mortgage is the insurance. Some banks can play their faces abit if they find out you're letting the property .... I think the only reason this happens is becuase they're not screwing you for higher interest rates - we all know how the system in the UK hates Mr Joe Public making the odd quid here and there !!

Looking on the really gloomy side .... if something major happened to your property - like it was set on fire - if the mortgage lender found out it had tenants in they would more than likely be awkward about paying out on any claims. On the other hand ...... how many houses set on fire? A possibility not a probability.

Regarding the letting agent. A full service package from them may sound abit steep but like Moorf says, it takes all the hassle out of letting a property. Regular checks, a cleaning service, an emergency call out service, rent collection, tax reports etc .... I reckon 10% is a bargain. I have been in touch with some letting agents who charge less than 10% ... I guess it all depends on location, property value, individual companies etc. Best advice for anybody planning on letting a property is do plenty of homework !!!

As for Moorfs flat being worth so much more now ...... I know what she means. The property boom of recent years has worked wonders for some folks. We paid 77k for our house 7 years ago - it's now on the market for 247k .... that's what I call investment :nice1

Diny

[Moorf]

Why bother having the stress of not bothering to tell your mortgage lender? If a fire's gonna happen sods law says it's gonna be someone who isn't covered :? - wouldn't you rather have peace of mind and just ASK your mortgage lender... if you are confident that its okay just cos it says nothing on your mortgage contract then what's the prob in asking them, or rather telling them, of your intentions?

I certainly would want to dot the i's and cross the t's where property is concerned.

I know of people who have simply said that the property was left "empty" but it doesn't take much for a tax official or whoever decides to investigate to spot that electricity is being used, council tax being paid, sky tv is active, phone connected etc etc. ... and some of those that I refer to have been caught... nasty situation especially if something goes wrong (fire/flood/theft etc) and you're caught out.

But that's just me, I like to know my nest egg is safe!

Moorf

[Diny]

I agree. We initially thought about renting this house out and 'told' our lenders of our intentions. They were ok about it. The only 'conditon' they put down was that every 12 months we 'reapplied' for persmission to rent it out. Strange request on thier behalf but all it would take is a phonecall so what the heck.

I guess it depends on which bank you have a mortgage with. Some friends of ours who have a 2nd property were given a right rollocking from their bank for not informing them it was rented out, they were faced with all kinds of hassles and extra charges. In the end they swapped lenders and got it all sorted.


Removing the hassle is the best way. Every second building on the high street is a bank or building society, shop around until you get what YOU want. I think honesty is the best policy at the end of the day, even though the temptation to buck the system and pull in a sneaky quid is overwhelming :nice1

Diny

[markkellaway]

Hi All,

I dearly wish we could afford to keep a foot on the ladder here and move to NZ but we simply can't do it. The equity in the house is what will allow us to live in NZ and have a decent standard of living by having a relatively small mortgage (as long as the b****y NZ $ loses some value!).

I also feel we are more likely to have a real go at making it work if the return trip is not so easy. Having said that, if we were in the lucky position to be able to afford to keep a property here no doubt we would.

Now if only that lottery win would happen (if I bought a ticket that is!)......

Mark. :P

[Terry&Sophie]

Hi all,

Terry and I were debating renting out my flat for a while when we move to NZ, partly so we could come back if it all went wrong, and partly to avoid the hassle of selling before we leave. Unfortunately, though, I only bought the flat last year and it was expensive :eek ... I doubt I'd get enough from rental income to cover the mortgage, expecially once the letting agent had taken their cut! :wah

We'll still give it a go and get valuations for selling and renting, but I'm guessing our best bet is to sell and keep the profit (hopefully reasonable given it's only been just over a year since I bought it, but nothing compared to some of you lucky people who got in there early!).

Our thoughts are that so long as we don't spend the profit from the house (maybe keep it in the UK) the money will still be there if we come back. It looks like house prices are finally stabilising, so hopefully it won't be impossible. We're hoping it would just be like taking a break from the housing ladder - we won't have been moving up like others who stayed in the UK but hopefully we won't be moving down, just coming back in where we left off.

I'm not sure how possible that is, or whether we'll ever want to come back, but that looks like the best option for us right now. Might have a rethink once we've had the valuations.

My advice (for what it's worth!) would be that if you've got a property that would cover it's cost with rental income it might be worth doing that, maybe for a year until you're more settled in NZ. I think I would if I could. :nice1

Sophie

[Raeven]

SoCalGal already knows my views with respect to this issue, but I'll post them here for any who may have previously missed them (all 2 of you!):

My Kiwi husband and I have fully postponed our move to NZ because of the rapidly changing economic disparities between the NZ and the US. The currency exchange rate has moved drastically in favor of the NZ dollar in the past 6 months. In the meantime, housing costs in NZ have climbed to an all-time high, although a flattening and even a drop in their housing market is now happening. Like SoCalGal and based on an enormous amount of research, I cannot say unreservedly that NZ will be for me for the rest of my life, and even my husband, who has been away from NZ for the past 24 years, is not certain he wants to make it a permanent shift. Still, we felt economically at risk here in California, mostly due to the current political climate.

We sold our home here in California and have purchased a property in a more affordable state with a small mortgage. We plan to live there for awhile and see if the exchange rate settles down. We did buy the new property with an eye to staying in the States for a significant period of time in a place we perceive to be safer and more aligned with our personal goals, but if our dreams of NZ persist, we are much better prepared to make that shift without sacrificing the option of returning to the States at some point in the future. I agree with SoCalGal that if you cash out your equity in the States and move lock, stock and barrel over to NZ, you have effectively forfeited your option to return to the States. So one's decision of whether to keep a toehold in the American way of life or not bears either careful consideration or a streak of devil-may-care brashness which I decidedly lack.

For what it's worth, Rae

[Paul]

Looks like a very common conversation going on round all the NZ-emigrating population!

My tuppence worth is that if we decide to go for the move, we would probably sell up and invest the "profit" in an account (£ or NZ$) and then use the interest on this money to contribute towards our rent for the first 6mths/1 year and not touch the capital until we 1) buy in NZ 2) return to UK

Advantage of this is your capital is "safe" in a bank and not at the mercy of the property market and you don't have to risk renting out your home. Tenants can be very careless with other people's property - it is definitely a risk and do not rely on agents solely to check out your property would be my advice! A few of my staff are tenants in properties and they have not seen the rental agent for years. They might get a phone call every few months and that is it!

Obviously the biggest risk if you end up returning to the UK is that you return in a period of property inflation (ie last 10 years for instance) and you end up back on the property ladder a few rungs down from when you left. Could work the other way however, especially for people leaving in the next year or two I reckon

Interesting topic though!

Paul

[Paul]

Other point I would add is for those in the UK with second investment properties, do not sell before you leave the UK otherwise you will pay UK Capital Gains Tax.
If you are non-Uk resident when you sell an investment (incl shares, property etc) you will not be liable to UK capital Gains Tax!!

if you return to UK within a certain time you may have to apy at a later date however, so plan carefully and see your accountant here and in NZ!

Thanks

Paul

[lindajax]

Hi All,

Need to say we are the gungho type and althouhg have never been to NZ have sold up, packed up and are going to go after Xmas.

We really didn't have enough capital to not sell the house - we had enough to buy a smaller one to rent as a back up but in the end decided that it would entice us to come back if things got a little tough.

My own view is that it is gonna be hard and lonely and those feelings can be very stressful and a big pull to come home and even more so if there is a proprty waiting for us. So for us the sell up and sod off type of attitude works.

I do however, agree that if that is what you feel will make you less stressed and feel more like you can leave at anytime then go for it if you have the cash!

Love
Linda xxxx

[catjlin]

Our position is a bit different as we live in a small ski town that is set to explode in the next few years (it's the closest resort to Denver and the last to be built up). We want to keep our condo as the vacation rental income is nice, but the property managers take 50%!!! :eek But it will at least leave us with a foot in the door in case we ever want to return, there is no way we'll be able to afford to move back otherwise. With our house, we will probably sell it, and hopefully recoup enough to buy something in NZ, the prices seem so reasonable. Now that we sound like land barons :laugh I'm hoping we can be one of those people we laugh at here with their main home in the city and a pied a terre elsewhere (preferably in a ski town) in NZ. All in all, we're not too worried about having to move back as the cost of getting to NZ is so high, we better not be turning around next year and coming back. :oops:

[Timbo]

We are in a pretty similar position to Mark, in that the equity we are sitting on is what we are using to fund our resettlement.
I realise that burning ones bridges is not a great idea, but it will make us give it 150% in NZ if nothing else. If that 150% proves not to be good enough, at least we have my good ole Dad to fall back on here. We can always start over, but then we dont have dependent kids to worry about so it is easy to say.

[Diny]

The property we will have here in the UK isn't big enough for the 4 of us to fit in even if we did decide to come back, and although it's not in a bad area, it's not where we'd want to live.

I understand what folks are saying, but knowing that we have a property back in the UK won't have any bearing on how determined we'll be to see things through should the move go belly up - it's a financial safety net - not a residential one. It just makes economic sense to us, taking all of our money to NZ has never been part of the grand plan.

I guess it's a question of knowing which bridges to cross and which ones to burn.

Diny

[Danpoll]

Regarding Mortgages,

i foolishly told my m company that I need to borrow 10K against the house my sister will live here and I will clear off. I then get in an argument that no I didnt say that I said I wanted a conservatory. they said sorry we have to take your first reason. So they wont give you money if you're not going to live there.

Just to think I am paying Alan Shearar's wages evrey month damn mortgage company and their sponsorship. Well I am helping to pay his wages a little bit.

[ruthyroo]

We have kept our flat in Edinburgh, it's rented out and managed by an agency. We did it for all the reasons outlined above - keeping a good investment going, having an escape route (as we've not gone for PR yet), etc etc. The agency charge 12.5% :eek which is pretty average in Auld Reekie for full management. As we'd only had it for a couple of years, the rent does not cover the mortgage and the charges - so we are paying a wee bit each month which isn't ideal...but will improve with time. Now that we are here though, it will depend if we decide to stay. If we don't sell the flat and have that lump sum to put on a mortgage here, we'll end up with a massive mortgage payment each month here in NZ. Depends if we decide to stay long term TBH.

[tigerlily]

I'm remembering a line from the movie (no, I did not read the book) Hunt for Red October. Sean Connery, as the Russian submarine captain, says:
"When Cortez reached the new world, he burned his ships. As a result his men were well motivated."


Who knows if this is even true! But somehow it seems appropriate.

[leslie]

am kinda with cortez. somehow feel the money better invested in new zealand - thus collective future success - than pumped into the back pockets of city boys and lap-dancers.

[Diny]

City boys and lap dancers ??????

Where the heck do you get that from? :eek :eek :eek

I remember discussing what funds to take and what funds to leave and where to leave it with our accountant/tax consultant. I'm pretty damn sure he didn't mention lap dancers :oops:

Better have a word with PB - maybe he's got some ideas along those lines.

Diny

[Moorf]

Ruthyroo wrote:
We have kept our flat in Edinburgh, it's rented out and managed by an agency. We did it for all the reasons outlined above - keeping a good investment going, having an escape route (as we've not gone for PR yet), etc etc. The agency charge 12.5% which is pretty average in Auld Reekie for full management. As we'd only had it for a couple of years, the rent does not cover the mortgage and the charges - so we are paying a wee bit each month which isn't ideal...but will improve with time. Now that we are here though, it will depend if we decide to stay. If we don't sell the flat and have that lump sum to put on a mortgage here, we'll end up with a massive mortgage payment each month here in NZ. Depends if we decide to stay long term TBH.

So... has your management agency done the Non-Residents Landlord Tax yet? Apparently it's for the agency to do, not you. Just interested - see my post under Banking/Education :?

[Hannah]

Hi, very interesting to see what others have chosen to do in terms on longer term investments and safety nets. We are coming to NZ for 6 months in Nov. and will have our house (and, thanks to career break policy, our jobs when we return). If we decide to go back to live (and thats part of what our 6 months is about - testing the water) we would probably rent out our house here. Selling it now would be a problem (we have a big housing development planned for the factory site next door to where we live, which ironically will lead to higher house prices when it's finished as the factory will be no more) and having it here is our idea of a long term investment. It's interesting to see that so many have done something similar, and as a bonus have a house to come back to if they decide long term NZ is not for them (and won't be priced out of the market as a result)
Hannah

[wilson182]

We have done exactly that. We came over on holiday in May last year and decided to stay. I went back to England to organise renting the house, and it was a good safety net in case things did not work out. We were a little concerned that it would not give us much incentive to make things work out, knowing we could easily go back, but the desire to live here was enough to keep us going. We are now in the early stages of selling the house. (So if anyone has any advise on selling from over here, then please feel free!!!!)