Hi,
I’m a long-term French resident but I’m thinking of moving back to the UK in 3-5 years.
I currently rent here but will soon be in a position to buy somewhere outright (divorce settlement).
As I’m not sure I’m going to be here long-term, I’m wondering if it might make more sense to buy in the UK and rent the property out.
I already own a flat back home which I rent out (very recent inheritance).
I could always put the money into a PEA and assurance vie.
I’m trying to work out the best way to do things. I just think the value of a property in the UK is more likely to increase than one in France. Or even possibly more than if I invested the money here once you take of the 30% tax I’d end up paying when/if I withdraw it before the 5/8 year mark
If I do end up deciding to stay here I’d have to sell one or the properties in the UK.
Could I ask for your thoughts on this?
What do I need to consider?
What am I not seeing?
Stick the money in a savings bond with NS&I?
They’re currently offering 3-year fixed bonds at 4.10%. Of course you’ll pay tax on the interest in France.
I personally wouldn’t buy in France if I wasn’t sure I was staying long term.
Thanks for your message.
Are we eligible to hold them as non-UK tax residents? I know we can hold Premium Bonds but thought any type of savings account was off limits.
Off to check it out…
Ok, so it looks like it is possible.
Tax payable on maturity, so maybe in the UK rather than in France if I do move.
Tying myself in for three years is a bit scary though.
You are definitely allowed to open NS&I bonds as a non-UK resident.
You don’t have to lock yourself in for 3 years.
They have 1 and 2-year bonds offering similar interest rates.
Be aware that if you now buy another UK property, unless it’s very cheap you will be hammered for stamp duty.
First you’ll pay extra because the new place will be treated as a second home (not because you already own a UK rental - that’s irrelevant- but because you will be keeping your current primary residence (the fact you’re a tenant is irrelevant)).
And second you would be buying as a non-UK resident so you’ll be penalised again.
This could be claimed back but only if you moved to the UK straightaway after the purchase.
Forgot to say. The second home stamp
duty surcharge could be claimed back but only if you made the new property your primary residence within 3 years following purchase.
Thanks again.
I’ve just done some quick sums.
Investing (ns&i 4.1% fix) vs buying and letting over a three year period would earn me £5k more after tax in total. (I’ve taken into account stamp duty - thanks for pointing out how steep it is! -, EA and conveyancing fees, ground rent, property management fees…).
I think the property is likely to go up in value over that same period, at least by £5k.
I suppose I coukd always do a one year fix initially (either here or in the UK, although the rates here are so poor), then buy. This would make it more likely that I could move into the property and claim back the overseas resident surcharge.
We have a great letting agent and fantastic tenants and no mortgage and we’re earning only a bit more in rent (once you factor in all the costs) than what we would get if we just put the money in an NS&I bond.
Having just done our tax returns, it would also be a lot less hassle.
For us, though, it wasn’t a purely financial decision. It was also about keeping a foothold in the UK because deep down we would both like to move there at some point.
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Yes, I agree it’s not just about the numbers.
A lot to think. I think if I was 100% decided sure to move back I’d go ahead and buy in the UK as the prices are just going up and up. If I were 100 % sure to stay here, I’d buy here.
I’m going to give the ns&i bonds some serious thought in the meantime.