Moving abroad while keeping your UK property can be an attractive option. In 2024 over half a million people emigrated from the UK, including around 77,000 British citizens.
You might move for work, retirement, or to escape the British weather. However, the question of whether you can rent out your UK home when living overseas isn’t always simple. It can depend on your current mortgage arrangements and other regulations. It’s not as simple as packing your bags and passing the keys on to a tenant!
If you own your property outright
You have more flexibility if you own your home outright without a mortgage. You can generally rent it out as you see fit. However, there are still important legal requirements to consider.
New regulatory requirements
The upcoming Renters’ Rights Bill will introduce a new Private Rented Sector (PRS) Database. All landlords of assured and regulated tenancies will be required to register themselves and their properties. Penalties will be incurred by those who market or let properties without proper registration. There will be a fee to register on this system.
Additionally, many councils already operate Selective Licensing schemes in designated areas. These require landlords to obtain a licence for each privately rented property they manage. The aim is to improve housing conditions, management standards, and tackle anti-social behaviour.
Short-term letting considerations
If you’re considering short-term lets through platforms like Airbnb, be aware that many areas have restrictions. For example, Greater London operates a 90-day rule. This means properties can only be let as short-term accommodation for up to 90 nights per calendar year without planning permission. Similar restrictions exist in other parts of the UK to prevent disruption to local communities.
If you have an existing residential mortgage
A residential mortgage is just that: a loan used to purchase a property that will be your main ‘residence’. If you move abroad and let your property whilst having a residential mortgage, you may be breaking your lender’s rules. This can lead to serious consequences. You could also invalidate your home insurance.
You will therefore need to switch to an expat buy to let mortgage…
Expat buy to let mortgages
If you have an existing residential mortgage and want to rent out your property, you will need an expat buy to let (BTL) mortgage. This might be suitable if you want to let your property long term. Bear in mind with a buy to let mortgage you will not be able to stay in the property yourself at any time.
Expat BTL mortgages typically require a minimum deposit of 20-30%. They also generally have higher interest rates than standard residential mortgages. Importantly, rental income is assessed as part of the affordability calculation, whereas a residential mortgage is assessed on income. These mortgages are available to those living in most countries worldwide. However, they aren’t available to people living in countries that are UN-sanctioned, or war-torn.
Eligibility criteria for expat BTL mortgages typically include being a UK national, or having indefinite leave to remain. You’ll also generally need a UK bank account. Minimum age requirements must be met, along with minimum income thresholds. Lenders will also expect a clean credit history, plus the property must meet minimum value requirements. There may also be other considerations, such as proof of address history.
The holiday let alternative
If you plan to visit the UK regularly and would prefer to stay in your own home, it’s worth considering an expat holiday let mortgage.
This type of mortgage permits the homeowner to rent the property out on a short-term basis. However, it also allows them to live in it for a set number of days (typically between 30 and 90 days per year). This arrangement provides expats with plenty of time to keep in touch with family and friends in the UK.
Some lenders will only consider expat holiday let mortgage applications in popular holiday areas though. While owning a home you can visit is appealing, managing multiple short-term lets takes time. After all, every time a new guest arrives, you have to get the property ready again.
Whether you are considering a traditional buy to let, or a holiday let, you will have two options available to you:
1. Gain consent to let your property from your existing lender
This will generally be the cheapest and most straight forward option, as it will be a variation to your existing mortgage contract rather than a new mortgage application.
- Your lender will need to assess your new circumstances, the type of let, and the anticipated letting income to decide whether they can grant you consent.
- Your existing lender may consider you for a consent to let, even if you don’t meet their criteria for new buy to let customers.
- There will usually be a fee for this. Check with your current lender how this fee compares to a brand-new mortgage application fee with other providers.
- You may have to take a new expat buy to let product right away, or you may be allowed to see your existing residential product through to its end.
- Not all lenders can offer buy to let or expat mortgages, in which case your only option will be to remortgage to another lender.
- Most lenders will allow you to see out the remainder of your existing product, or provide a window for you to remortgage away from them.
2. Remortgage to another lender for an expat buy to let mortgage
This will be a completely new mortgage application.
- A remortgage is a lengthier process than a variation to an existing mortgage. Your new lender will need to complete additional status and property checks, plus you’ll need a solicitor to deal with the legal work required.
- The full process for a remortgage, including the legal work required, can take up to three months, or even more in some cases.
- A new application will generally come with higher fees than a mortgage variation, although some may offer fee-free or fee assisted options.
- Remortgaging may also provide you with the opportunity to find a better interest rate than your current provider can offer.
- When switching mortgages, it’s important to think about timing. You may have to pay an early repayment charge (ERC) if you want to leave your existing residential mortgage early.
If you’re buying a new property
If you plan to purchase a UK property specifically to rent out while living abroad, you’ll need to have an expat BTL or holiday let mortgage. Standard residential mortgages won’t be available, as the property won’t be your main home. If you intend to leave the property unoccupied, or have family live in it in the UK, expat residential mortgages are available.
Working with the professionals
Managing any rental property from overseas can be challenging. Therefore, many expat landlords choose to employ professional letting agents. They handle the day-to-day management, tenant/guest relations, and maintenance issues.
Moving abroad while keeping your UK property requires careful planning and the right mortgage product. But, with preparation and professional guidance from a mortgage broker (if required), a UK property can work hard for you. Even from the other side of the world.
