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Nov, 2014

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  1. #1
    Join Date
    Sep 2005
    Posts
    542

    Default Non-resident landlord scheme (NRLS)

    If a non-resident LL has been given approval to receive his rents gross, am I correct in thinking that he will then pay UK tax on the proceeds of his UK letting business?
    The contents of this note are neither advice nor a definitive answer. If you plan to rely on this, you should pay somebody for proper advice.

  2. #2

    Default Prospective L is non-resident UK National; precautions?

    Hi there, I'd really appreciate some advice on this please.

    I recently viewed a property which I would like to rent. The landlord is overseas (Thailand) and arranged for his friend to show me around the property. I loved the flat and have spoken to the landlord on the phone (he called me from Thailand this morning).

    I have posted on these forums before regarding the fact that I am working but will be receiving LHA. The landlord has said he doesn't mind this. I informed him that I would only be able to move in on 24th September which he said was too far away for him although he would be OK with early September. I informed him that this would be difficult as I'm moving out of my current house in August and staying at my mum's for a month to save up for the deposit.

    Anyway, cut a long story short, he suggested if I would be able to move in in August we could agree a payment schedule for the deposit as long as I paid the rent. I was very happy with this. We have agreed a schedule. During the viewing yesterday his friend informed me that the landlord wanted the equivalent of 2 weeks as a retainer which will be deducted from the deposit. After receiving the retainer he will stop showing the flat.

    He has said that he would provide me with the details of his UK bank account for me to pay the retainer into, which I've agreed I'd do on Wednesday.

    The problem I have is that I have never dealt with an overseas landlord and I'm quite worried that he might run off with the retainer and not rent me the flat or that this whole thing is some elaborate con.

    I didn't expect finding a flat, a very nice one at that, to be so easy. It's within the catchment area of a good school, he doesn't mind LHA, he's willing to receive the deposit in installments just so that I can move in earlier. Seems too easy. Does it sound like a con?

    Thanks in advance
    Last edited by nicknaks; 11-07-2009 at 11:09 AM. Reason: grammar

  3. #3
    Join Date
    Jan 2008
    Posts
    738

    Default

    Well, not sure about it being a con but a few things do come to mind.

    Although in Thailand, is LL from UK? You could check Land Registry to make sure he actually owns the property.

    If it was a con, I would think he would be after more than 2 weeks money.

    If he takes the deposit in dribs and drabs, how is it going to be protected? The general consensus is that to be legal, each drib and drab would have to be protected as it was collected - I wonder if this LL knows about Deposit Protection. (Remember, this is actually more for your protection than LLs).

    There is also a legal requirement that unless LL has exemption (not sure how he proves this to you) you are legally required to deduct tax from the rent at the basic rate to pass to HMRC! I expect he is probably ignoring this.

    Will you have a proper AST agreement? Is the friend acting as his agent? You will need an address in England or Wales for the service of notices - will it be the agent's address? As LL is in Thailand, who will sign the agreement in his absence? Who will you contact if the boiler breaks down or a water pipe bursts....?

    Does the LL have mortgagee's consent to let the property?

    I am not saying that this is not a good deal for you but I just think you need to be aware of the items I have mentioned. I am sure others will think of things I have missed.

    (I am abroad a great deal and would not let my property without the assistance of an agent - tenants need someone to be able to contact. On the other hand, my brother lives in New Zealand and would not dream of using an agent for the rental of his property in the UK!)
    Mrs Jones
    I am not an expert - my posts are my opinion and should not be taken as fact!!

  4. #4

    Default

    Hi,

    How did you find out about the flat? Did you go via an agent?

    If you have gone via an agent and have them confirm what you have negotiated directly with the LL then I would feel more comfortable.

  5. #5

    Default

    Thanks so much for your prompt reply Mrs Jones.

    Just after I posted the topic, he called again to let me know that he had emailed me some documents. These included: scanned copies of his driver's licence and passport. (He is a British citizen - country of origin Cyprus.) An AST for me to read (containing his UK address) and the receipt as proof of receipt of the 2 weeks retainer also outlining the payment schedule of the deposit. Obviously both these documents will be valid once I have provided him with my full name and address.

    So this looks promising. As regards protecting the deposit, I don't really want to ask as I really want the flat and don't want to ruffle his feathers. Similarly with regards to whether he has the mortgagee's consent to let - I'd rather not ask. I do understand the implications of his not protecting the deposit and to be honest that's not of major concern (although I know it probably should be). As regards the mortgage situation - what are the implications for myself if he doesn't have consent?

    I will ask who I need to contact in regards to repairs etc, although I suspect that it is probably this friend that showed me around. He did say that he was the local handyman - although this doesn't make him a qualified plumber, electrician etc. I will ask though.

    I had no idea regarding the tax issue! Will have to look into that.

    Thanks for the reply!

  6. #6
    Join Date
    Jan 2008
    Posts
    738

    Default

    Quote Originally Posted by nicknaks View Post
    As regards the mortgage situation - what are the implications for myself if he doesn't have consent?
    Probably not much. As long as he is paying the mortgage, it shouldn't affect you - except that his insurance might be invalid. I would take out contents insurance for your stuff anyway.


    I had no idea regarding the tax issue! : Will have to look into that.
    Again, best not to look into it too far - keep head down - LL seems to be reasonably clued up etc., so I wouldn't worry about it. Just don't tell everyone he is abroad. No one actually needs to know. (No, of course I never said that....)
    Mrs Jones
    I am not an expert - my posts are my opinion and should not be taken as fact!!

  7. #7

    Default Non-Resident Landlord Scheme

    I moved to the USA to work in 1992. I have recently returned to the UK. While I was away I let the house that I own in the UK. I duly declared all the rental income to the IRS. I have a vague recollection of contacting HMRC (or whatever they were back then) before I left to tell them that I intended letting my house and gave them a rough estimate of what the rental income would be. Unfortunately, I don't have anything in writing to confirm this. For whatever reason (maybe because the rental income was so low that it would have been below the personal allowance threshold) I was never asked to file a tax return in the UK while I was away. I'm now getting ready to sell the house and was wondering whether I'd be entitled to Letting Relief for the years it was let, in order to reduce the CGT. As an aside, was the onus on me to check with HMRC periodically whether they wanted me to file a tax return? I'm not sure if the Non-Resident Landlord Scheme was in force in 1992 - can anyone enlighten me as to whether it's always been there, or whether it was introduced while I was away (and if it was while I was away, whether the onus was on me to find out about it).

  8. #8
    Join Date
    Aug 2008
    Posts
    2,530

    Default

    1. The NRLS is a problem for your tenant/agent, rather than you, as it is up to them to withhold basic rate tax on your rent.
    2. It appears that - provided you were entitled to a personal allowance, which appears likely; and provided that the rent was below this level - you had no IT liability during your period of absence, so you are OK anyway.
    3. The NRLS has been around for a very long time indeed, so I imagine it was there in 1992; and yes, if it wasn't it was your responsibility to find out about it.
    4. You were never asked to file a tax return because you never told them you had any income.
    5. Yes, letting relief will be available, irrespective of whether or not you declared your rental income. You may well, of course, have an income tax problem.

  9. #9

    Default Nrls

    Hello all, I'm hoping you might be able to give me some advice.

    I have only just been made aware of the Non Resident Landlord Scheme.

    I am currently a tenant where I have been for nearly 3 years. My landlord lives permanantly in Spain, but I have a UK address to contact him which is his Uncle.

    I've read up on the NRLS and have discovered it is my responsibility to deduct the tax from the rental income. I did not know this, and accept that ignorance is no excuse. I pay the rent directly to the landlord. No LA involved.

    Before I contact my Landlord to check what the position is, I just wanted to know whether I can be held liable for my landlords tax? Should I consult a solicitor? Or just contact the landlord and tell him to sort it out?

    Hopefully I will find out that there is good reason for him not being in the NRLS but before I show my hand I need to check what the consequences for me could be!

    My rent is £1000 pm and his interest only mortgage is only £150 pm so I expect this could be a hefty sum going back three years.

  10. #10
    Join Date
    Jan 2007
    Posts
    2,234

    Default

    No you are not responsible. HMRC would have wriiten to you. The Landlord may be registered as a NRLS and can opt for the tax to be collected by the Tenant ( rare ) a letting agent, or he resolved the deductibles and tax via his SATR so the rent is paid to him gross. ( Normal, if there is not an agent in the loop ) As you appear to know the LL mortgage fees then I suggest you contant the LL and check if he is registered but really it is not your business. Regards Peter

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