Selling your UK house to move to LOS?

[BongoBill9999 0]

I have rented out successfully in the past and I was 3000 miles away. If I rent out this time I will have two (big) brothers and a sister living within 2 miles. Also a large catchment of teachers and civil servants as potential renters almost within walking distance. That is not to say it is without risks.

 

Equally, selling and investing the proceeds on the stockmarket is not without risk. House prices have sometimes been volatile in UK, Niall thinks they will crash, maybe, maybe not. Wish I had a crystal ball, or crystal balls even. Ouch.

 

Horses for courses methinks.

[BigDUSA 71]

Here you go again making generalized statements.  I've had 2 rental, the first one I've rented since 1974 and its only been vacant 1 month.  The other I began renting in 1993 and sold it last year and it was never vacant.  Didn't have a property manager and both exceeded your 5 mile radius.

I'm just curious, why come after me? When Niall posted first and said what I said. I'm glad your rentals worked out for you.

 

Hub,

 

Yes.

Edited November 22, 2005 by BigDUSA

[valentinoxxx 4]

Don't forget that lettings insurance; http://www.letsure.co.uk/

[Eneukman 1]

Hi,

 

As an add on to EMan's last post ...

 

It generally works a little like this. Interest rates are generally used to keep a cap on inflation. The base rate in the UK currently runs at around 1 - 2% greater than the inflation rate. So, you are only going to get at most 2% (taking into account ISAs, tax allowances etc) greater than the rate of inflation.

 

So, to stand still on your capital and get £14K a year, you need to invest an amount where 2% (at best!) gives you 14K and that amount is around £700K.

 

Now that doesn't include any thought of exchange rate fluctuations that can go for or against you, the dreaded stagflation :-) and of course how long will you live ... as it's no use being dead with all your capital intact :-).

 

My arithmetic is crap but but I think you need a lot more than 350K invested to get a consistent 80K baht a month.

 

Alan, Am I talking shite or is £700K a closer figure to invest to maintain 80K baht a month than the simply worked out one you suggested?

 

Cheers,

 

C.

My figure of £305,000 - £340,000 would give you a monthly income of 80,000 baht per month (assuming you could get 4% to 4 1/2% after tax) now. I hadn't factored inflation into my figures which will increase the 80,000 baht per month requirement year on year. So if inflation in Thailand were to run at say 5%, you would need 84,000 baht next year and so on.

 

The principle of what you're saying is correct though I'm not absolutely certain on the arithmetic. Certainly £700,000 would cover you, and would I think from some very quick and very rough computations give you a reasonable amount of leeway in future years should interest rates fall or if the exchange rates drops drastically.

 

Investing on the stock market is also a risk but I will be doing my best to check out reports on the companies I've invested in in Investors Chronicle and will sell and buy shares in a different company if the need arises. As many of these shares were purchased after I left the UK, I can sell them at any time without having to worry about Capital Gains Tax implications.

 

Alan

[wagger 0]

The differance between £700K and £350k is significant!

 

This topic has been covered before and i remember there was one post which simplistically gave the easy awnser! I have checked it against many models now including the Trinity study and fireseeker and it is used widely by professionals as the "rule of thumb". Always seems to come out pretty close.

 

It is: to achieve an inflation proofed return from a mixed portfolio of investments drawing down on Capital to zero requires a fund of 25 x target income (before tax)

 

so....

 

£700K / 25 = £28000 p.a or 163,000 Thai Baht p.m

 

£350K / 25 = £14000 p.a 98,000 Thai Baht p.m

 

and i am thinking that:

 

80,000 Thai baht p.m needs invested capital of £342K (not accounting for tax)

 

one has to assume that investments will return greater than LIBOR over the longer term and i presume this accounts for the differance.

 

Interesting to note though how we can come up with such wildly varying figures and just goes to emphasise how careful you need to be in this area.

 

N.B so long as the investments are in the economy of currancy chosen then efficient market theory would suggest that inflation should be factored into the investment yields

Edited November 22, 2005 by wagger

[torrenova 644]

What about downsizing ? Realise some cash and have a base to come back to. Maybe buy a flat which can be easily rented then you sort of have the best of both worlds.

[Eneukman 1]

What about downsizing ? Realise some cash and have a base to come back to. Maybe buy a flat which can be easily rented then you sort of have the best of both worlds.

I suspect that the success or otherwise of that would depend on where in the UK you used to live. There were two or three flats available for rent in the street where I lived in Edinburgh and the yield after tax and expenses would have been quite a bit under 4%. I'm not sure what the Capital Gains Tax implications would be if you were to do that and then go back there to live out your dotage. The gain in the period you were living in Thailand might not be exempted as it wasn't your principle residence during that time.

 

Nevertheless, that is one option that might suit some people.

 

Alan

[Eneukman 1]

Wagger,

 

I've seen that sort of computation before. The problem is that it assumes that you die BEFORE your money runs out. If you manage to live for a further 35 years,

you're in deep shit for the last 10 years.

 

Having said that, when I was doing my earliest sums, I was working on a similar method on the basis that I wouldn't touch my pension until I was 60 and that I would need to draw on some capital every year until it kicked in. As it happened, I decided to take my pension at 50 on the grounds that I might not even reach the age of 60. I also took the tax free lump sum option, which has been invested in a company currently offering a yield of 4.7%.

 

Alan

[BigRobo 0]

What happens when your DHSS tennant takes up all the floorboards and uses for firewood to heat the house, takes, and sells all the lead off the roof, rips out the copper water cylinder to sell.

 

Hate to be negotive but yes this did happen to one of my rental properties.

 

Total cost of damage and replacement 2001 £4,600 less deposit bond of £400

 

DHSS do not accept responsibility for tennants.

 

Also have heard of tennants proposing to own your property to rent out several times, or to order goods from suppliers without paying making your property a blacklisted one.

[wagger 0]

Yes Alan you are dead right LOL!

 

The problem with all these calculations is that at the end of the day you have to make some kind of assumption... which may or may not turn out ok, the only "safe" way to be sure is to go for annuities where the insurance company assumes the risk of you living longer than planned at the expense of some of your return.

 

I think my planning is following your train of thought, I will will retire early and use equity capital to fund the interim up to pension payout at 55 and then go for the full tax free sum. My calculations are based on living to 90 and i really think that is on the safe side considering my lifestyle... haveing said that i wont have much cash coming in if i live any longer!

 

The only point i was trying to make with the rule of thumb calculation is that it seems to come up with the same sort of results as more sophisticated tools that are available but at the end of the day one just has to go with a lump sum risk profile that you feel comfortable with, for some i suppose it is £700K and for others £300K

 

I think i'm somewhere in the middle.

 

I'm still keen on the idea of having some cash invested in UK property investment trusts so that if the UK market does run away then i can still get back in if the need arises, I agree with the hassle factor of renting out... it's a headache you can do without when you are 5000 miles away!

Edited November 22, 2005 by wagger

[torrenova 644]

If you are sure that you won't come back, sell up. If you aren't sure, then maybe retain somewhere as rental costs are so high in the UK.

[wacmedia 277]

If you are sure that you won't come back, sell up. If you aren't sure, then maybe retain somewhere as rental costs are so high in the UK.

 

Hi

 

Look above.

[Emil 0]

I'm just curious, why come after me? When Niall posted first and said what I said. I'm glad your rentals worked out for you.

 

Hub,

 

Yes.

Oversight, I'm in Pattaya now and skim through the posts quickly. I believe my personal success with the rentals was the fact that I didn't try to get top dollar so that I had potential renter coming to me. Only advertised once in the paper, after that friends of the renter who was moving out contacted me.

[Niall 0]

You guys have some very weird ideas about UK taxation.

 

I suggest you either get an accountant or read the Inland Revenue website, which is surprisingly helpful.

 

In short. Assuming you are non-resident for tax purposes then you are not liable to income tax on most forms of income, for example bank interest, however you are liable for income tax under Schedule A on rent income from property located in UK. You are classed as an Overseas Landlord and either the agent or your tenant is under a duty to deduct tax from the rental income unless you have applied for and received a dispensation for IR allowing you to be paid gross, basically this is only granted if they trust you to pay the tax yourself.

 

So you have an investment who'se returns are poor and taxed to boot. Compare rental returns to any interest bearing accounts say in Singapore and its a no brainer.

 

The ONLY reason to hold on to UK property is if you believe that there will be a significant rise in its capital value. This is up to you. My personal opinion is that interest rates will rise and prices will fall but if I knew for certain then I would be a billionaire. Up to you but blanket statements likely DON'T are just silly.

[Eneukman 1]

Niall,

 

According to the Inland Reenue's leaflet IR138, "If you are not resident in the UK for tax purposes you will not be liable to UK tax on any overseas income. You will, however, normally remain liable to UK tax on your UK income. Whether you will pay tax and if so at what rate will depend on the type and amount of your chargeable income."

 

Certainly if your sole source of income in the UK was bank interest, you would be well aadvised to arrange for it to be paid without deduction of income tax.

 

My own feeling is that in the long term property prices will continue to rise but at a much slower and more sensible rate. I'm not sure about interest rates and I am a bit out of touch on current thinking in the UK, but before I moved out here the general consensus was that rates would fall slightly.

 

I agree with your comments on blanket statements as everyone has to make their own decision based on their own individual circumstances.

 

Alan

[valentinoxxx 4]

Surely the rate of return depends on your outlay. So a blanket statement about interest bearing accounts being better than rental yields are just plain silly.

[Hub 203]

Surely the rate of return depends on your outlay. So a blanket statement about interest bearing accounts being better than rental yields are just plain silly.

Agreed, and many other factors as well including tax rates, availablity of rentals in the area, maintenance costs, etc.

 

Hub

[Lancashirelad 0]

Hmmm, so many comments from reading all the above i can't remember them all, but here's a few:

 

I agree with BongoBill, wish I could get £400 a week for my 3 bed bungalow. Be lucky to get £800 a month i think.

 

If you were lucky enough to have £350-700K to invest, you would be silly to just put into an interest bearing account where, as some mentioned, over time allowing for inflation, it would decrease in value.. A sum of that size would need to be professionally managed & would almost definately perform much better than standard interest rates. Most major banks have an investment advisory/management service for this type of thing.

 

Someone said about selling the UK house, but keeping cash reserves incase you wanted to return & buy here again in the future. That was exactly my point of this thread initially. If uk property continues to rise at a fair rate, if you wished to return in say 5 or 10 years, you would not be able to get back into the market, it would have left you & your cash behind.

 

On the opposite hand, if you had kept your uk property & had the rent off it over say 5 years, but now decide to stay permanently in LOS & sell up here, your house here would be worth more.

 

One guy suggested down-sizing. This seems very sensible, but is obviously not an option to those who are already down-sized.

 

Intrigued that I have started such a popular thread

 

My apologies that I can't remember by name who said what & I don't know how to do the multiple quote thing.

Edited November 23, 2005 by Lancashirelad

[alesypalsy 0]

Well at the moment i am about 1 week away from exchanging, when done i will be relocating full time over to los, For me a 31 year old it is the right thing to do, i can come back in 5-10 years if it all goes wrong but the way i see it how can life be as boring in paradise, its all down to what you. I remember when my mum lost loads of cash along with many other people in the reccesion back early 90's, and all the usuall suspects saying house prices will not fall etc, so they made a big come back, when the real investors in this world get bored of putting their money into one comoditty they move into another, at the moment gold is back to a high not seen for 20 years,,, watch the house market when the interest rates inevitably rise and no fucker can afford to repay their mortage. Things in this world move in circles and graphs, historically in the financial world take a look and make your own mind up never listen to the know it alls whom will tell you what they think as it is usually them that stand to gain. I used to day trade stocks and shares when dot com boom was in, made a fucking fortune in around 8 months and then lost the fortune i had made in a matter of about 6 weeks, greed was the cause,,, thank god i met los,, sorry for such a long winded blah blah but to be honest what the hell is life for?

Better to burn out than to fade away!!

Any one for a pint.

[valentinoxxx 4]

Different strokes for different folks.

I don't see any one location as paradise. Stay there long enough and you'll see the downside.

I spend around six months annually in that part of the world, so I can appreciate the positive things in that region as well as the good things about the UK and other regions.

 

So many who reckon they are living there, need to leave to go back to their respective countries to generate more funds.

 

For me, I regard it as an extended holiday, happy to know that I can leave at any time.

 

Spend your money wisely.

[wacmedia 277]

watch the house market when the interest rates inevitably rise and no fucker can afford to repay their mortage.

 

Hi

 

I agree, many have remortagaged to maintain a high life style. Think it's going to end in tears soon. Wages have no real link to house prices in Blighty anymore.

[bar -monster 0]

It costs £400.00 a week for a shit hole in Bolton!!

 

£400 for a house in bolton, where? £400 a month is more like it .

i know people who pay £250 a month ! and yes i do live there :

[Harry Palmer 0]

Sell the UK property & buy a couple of LoS condos for rental/ investment.

[Bazle 1,450]

As i understand it (and i am not a tax advisor) the issue of capital gains tax due on sale of the primary residence IS subject to your country of residency (country of residency in Tax terms another subject that needs qualification). After convincing the Tax office that you are no longer UK resident you have 3 years within which to dispose of your primary residence (unless you had to sell it to prove you are non resident) and not be liable to CGT. During this time you can be renting it out and claim income tax relief as mentioned by previous posters.

 

If there is anyone here qualified to comment please correct my understanding if this is incorrect... it may effect my planning in a big way LOL!

If a property has been your sole/main residence throughout its ownership to date, usually you then have 3 years in which to sell it without it affecting the tax free status of any gain on sale. You can rent it out, do whatever you want, in that 3 years. That applies whether you are resident in the UK or not.

 

If you are not resident in the UK, prima facie, you are not liable to capital gains tax (except on certain business assets located in the UK). However, to stop people avoiding CGT by becoming non-resident, a few years back they introduced some legislation which, broadly, will catch gains you make in the 5 years after you cease to be UK resident on assets you owned when you left.

 

So, if you sell within 3 years of leaving the UK (and stopping living in your UK property), no problem. If you sell after you have been non-UK resident for 5 years, no problem. The issue is if you sell in the gap in between. But even then there are exemptions and reliefs which will reduce (possibly to zero) the gain on which CGT is charged.

 

Incidentally, if you do have to pay CGT, it is not a matter of taking the value of the house on departure from the UK. The gain is time-apportioned pro-rata over the years of ownership. So the market might have risen hugely when you were in the UK but have been flat since you left and you could still be looking at a CGT bill.

[Gus 97]

I have been reading a few 'Moving to Pattaya' threads and I decided to tag onto this one.

OK, I am currently married, no children, in my late 50s (but look younger )

my missus is a typical fucking misrable farang missus

 

My posting is not influenced by alcohol, miserable UK weather or a BeerBar TG that I have fallen head over heels for.

I need to seperate living in Pattaya mode from holiday mode, I have just spent a month in LOS (TR to follow) but I feel there is nothing in the UK for me now.

 

When I returned home the missus was indifferent to my presence and although she is good at cooking, cleaning and works full time her blatant indifference to me pisses me off.

I am a self employed groundsman/gardener earning low income but paying small NIC and very little income tax and have about 15K cash with no loans.

The house is worth about 240K we owe 20K but with a Standard life policy that 20 would more or less be covered.

Also influencing my decision will be my drink driving charge next month, brief says 50/50

 

So lets cut to the chase, I would have £140K-150 cash, which I know is not enough to retire on. The last thing I want to happen is to burn all my bridges in the UK, spend all my dough in LOS and then join the Lek Hotel flying club in 5-10years time.

 

One thing I have been thinking about is selling up, and living in LOS mid October to late March and work here in England in the summer. The big problem where do I live? There is not much point me paying out £100 pw +++ if I am only grossing 250. I could probably find somewhere but may get homesick anyway, the English summers are not the greatest. Also, not sure if I'll still have wheels.

 

Well that's about it, if you can add anything please do, maybe I cannot see the forest for the trees. I have assumed all along that I won't be able to generate any money in Thailand, but have not looked into Condo Rental.