Moving abroad for 3-5 years : sell or rent out home

fiona-f

We bought a family home in South Dublin, about 2 years before the bust. We had nearly 20% deposit and have a variable non-tracker mortgage on the rest. Prices then seemed to plummet by almost half and we would have been in negative equity for quite some time. But no major problem as we had no intention of selling and were happy here. Now between paying off mortgage and rising prices, I believe we are no longer in negative equity and would stand to have a lump sum if we sold now and paid off mortgage, although sale price would still be approx e50k below what we paid in boom times.

Now it looks like a good employment opportunity means that we might move abroad for a fixed 3 to 5 year period, beginning within the next 12 months. My partner's employer would pay our rent abroad to a very good standard and we would each have security of resuming our jobs here on return. If we do go for it, our dilema is what should we do with our house in the meantime? From reading this board, being a non-professional landlord is a lot of hard work and may not cover our large mortgage repayments after tax, expenses, etc plus the risk of damage by tenants. We do love our home and while we know we are overpaying for it between high purchase price and non tracker mortgage, we would have been happy to stay here for the foreseeable future. But if we take this term abroad, we would have the luxury of our accommodation cost covered and so huge increase in disposible income and savings potential if we didn't have the mortgage. So grateful for people's views on what they would do - rent out the house for 3 to 5 years and move back into it when we return or sell up now, takethe 50k loss on purchase price and save the huge sums we pay on mortgage while overseas and then look at rent or purchase when we return? It's likely we would choose to live in a broadly similar area when we move back. What would you do? Are there any other factors I haven't taken into account? Thanks.

quadrifoglio verde

As it's a house in an area that you plan on returning to in the next 3 years or so, then I wouldn't selling it anyway. What happens if after a year your family are hating living abroad and want to move back to ireland. What happens if house prices have rose further by the time you've returned (which they look like doing). You mightn't be able to afford to buy in the area that you currently reside in.
Also stop seeing it as a 50k loss. If you'd been renting the last 7 years you'd have paid more than the 50 k you've lost.

fiona-f

quadrifoglio verde wrote: »

Also stop seeing it as a 50k loss. If you'd been renting the last 7 years you'd have paid more than the 50 k you've lost.

Thanks for that. I don't normally see my house as anything other than a home, but I do think it is a loss of sorts if we were to sell now - over the last seven years, our monthly mortgage has been consistently higher than the equivalent rent, so the 50k is in addition to this. So I think it is a relevant factor in decision-making, do we write that 50k off by selling now?

Bigus

fiona-f wrote: »

Thanks for that. I don't normally see my house as anything other than a home, but I do think it is a loss of sorts if we were to sell now - over the last seven years, our monthly mortgage has been consistently higher than the equivalent rent, so the 50k is in addition to this. So I think it is a relevant factor in decision-making, do we write that 50k off by selling now?

Yes , but does this not also include an element capital repayment,

in other words somebody else is paying down the mortgage for you.

Also you have the leverage of say a 500k asset in a rising market, instead of just savings.

Plenty of good professional letting agents who will look after everything too, with all that's going on in worldwide news , a bolt hole in Ireland might seem attractive soon enough.

triggermortis

You could also consider the RAS scheme. You get the rent from the local authority instead of an agent or individual.
You might have to jump through a few hoops to get the property to standard, and register, but once that's done you get guaranteed rental income

whomitconcerns

if you can afford to and see yourself there in the long term, no question, get a management agent in and rent it out while you are gone. This will take most of the hassle away from you.e

Pawwed Rig

triggermortis wrote: »

You could also consider the RAS scheme. You get the rent from the local authority instead of an agent or individual.
You might have to jump through a few hoops to get the property to standard, and register, but once that's done you get guaranteed rental income

tread with extreme caution if you decide to do this as this scheme is not as good as it sounds from the above post. Too many issues to go through in one post but do a search on this forum and you will see all of the pros and cons.

The_Conductor

triggermortis wrote: »

You could also consider the RAS scheme. You get the rent from the local authority instead of an agent or individual.
You might have to jump through a few hoops to get the property to standard, and register, but once that's done you get guaranteed rental income

Its Dublin 2?
Its extremely unlikely- given the limited information the OP has supplied- that the level of rent that might be approved for RAS would be but a fraction of the open market rate. In addition to this- you still have all the rental problems associated with RAS (I'd echo the previous post advising the OP have a search through this forum- its a bit of an eye-opener).

I really couldn't advise any potential landlord avail of the RAS scheme- until such time as its thoroughly revised, responsibilities are devolved to councils, proper deposits are put in place to cater for property destruction (!!!), rents are moved a lot closer to market rates etc etc etc.

As it stands- a landlord has far too much to loose when availing of RAS- a small cadre of problem tenants have tarnished the scheme for everyone else- and councils with their intransience over repairs etc- mean its not worth a landlord's while taking the massive reduction councils demand- as the RAS tenants appear to generate a significantly higher number of repair orders, than do regular tenants.

strandroad

I would rent it out through a good agent who will take care of everything on the ground for you. Some agencies are looking for long term rentals for higher professionals posted to Ireland for a few years, would your house be of such standard?

Dredd_J

OP, do not deal with social welfare at all. The only way anyone should deal with them is if the SW rent the house and then deal with everything themselves after that. They just want to give you below par rent, and then throw thier problems and possibly misfits who will wreck your house onto you, and wash their own hads. Dont fall for that,


On renting the house or selling it.
We have a house in Spain that we have had now for a long time.
We are going to take early retirement and move there (my OH is Spanish and we lived there for years before).

The really nice thing is that we had an agent looking after it and it was bringing in some money for us over the years and now that we want to retire nice and young, we have no worries about rent or mortgage as its been paid off long ago.

There is a lot to be said when you are looking at retirement to not have to worry about rent or mortgage anymore.

I would be inclined keep the house and rent it for the time being OP.
Just hand it to an agent and get the full management service - ie you hand them the keys and forget about the house. They rent it and find tenants, deal with repairs etc (just get them to run anything that needs money spent on it by you, to keep them honest).
That service should only cost you 8% of the yearly rent. They will tell you its 12% but they will all do it for 8%. Then that 8% comes out of taxes, so it really costs half that. Never get agents to find you a tenant only. Thats a ripoff service.

Say there are 15 years left on the mortgage for example.
Work out what it is going to cost you out of your pocket after taxes etc to keep it.
So imagine that was about €300 pm out of your own pocket after rent, taxes, mortgages etc are all balanced up.
And then ask yourself if i could buy that house with €300pm for 15 years would I?

Everything after that 15 years then is plain sailing. You can live in the house, sell it or set fire to it . It will be all yours.

Pawwed Rig

The_Conductor wrote: »

Its Dublin 2?

I read that as South Dublin, 2 years before the bust. Either way if it is anyway close to city centre or in a nice area it will be easy to rent or sell.

fiona-f

Pawwed Rig wrote: »

I read that as South Dublin, 2 years before the bust. Either way if it is anyway close to city centre or in a nice area it will be easy to rent or sell.

Sorry, yes suburban South Dublin, not Dublin 2. Sorry for any confusion.

thanks for all the view points so far.

I am completely unfamiliar with landlording - is there any resource that will let me work out what net income would be if house rents for €x per month? What is the typical vacancy rate - should I assume rental income for only e.g. ten months a year? Someone mentioned the 8% letting agent rate, which is helpful. Will my mortgage payments or insurance go up if it is not my residence anymore? Any other tax issues?

House has been gradually renovated/redecorated with new bathroom, kitchen etc. I reckon that it would be more attractive to families given location and the fact that the bedrooms are not en suite.

Many thanks.

Dredd_J

fiona-f wrote: »

Sorry, yes suburban South Dublin, not Dublin 2. Sorry for any confusion.

thanks for all the view points so far.

I am completely unfamiliar with landlording - is there any resource that will let me work out what net income would be if house rents for €x per month? What is the typical vacancy rate - should I assume rental income for only e.g. ten months a year? Someone mentioned the 8% letting agent rate, which is helpful. Will my mortgage payments or insurance go up if it is not my residence anymore? Any other tax issues?

House has been gradually renovated/redecorated with new bathroom, kitchen etc. I reckon that it would be more attractive to families given location and the fact that the bedrooms are not en suite.

Many thanks.

I doubt you'll have any vacancy in Dublin these days.
Use an agent and they'll have a new tenant walking in the door as the old one is walking out.

Just look up how to do your taxes and fill one in based on your rental income, your income, mortage interest, tax rate etc.
Take example figure for the rent as 12 months at whatever you think you'll get for your house now.

Dont tell your mortgage provider would be my advice. Call your insurer and ask for a quote for landlord insurance. That will be an expense so deduct from tax too.

Irishlandlords website has many worked examples. Just plug in your figures into one of them.

Pawwed Rig

Alot of tax issues and regulation on it. Plus you would be non resident so would need to either have an agen here or suffer withholding tax on your rent payments. If in a good area vacancy may not be an issue (will depend on your address). If you really have no idea then a tax advisor would be the best course of action. It might cost you 200-300 but it is deductible for tax and will give you peace of mind.
Basically you are taxable on
Gross rental income
less
75% of mortgage interest
Insurance
PRTB charges
12.5% Cap allowances on F&F (vouched)
Maintenance & repairs

Taxed at 20% where you are non resident for the whole year. Different rules if you are resident or part resident.
Not a huge deal for a tax advisor but a steep learning curve if you are starting from scratch.