Letting your Overseas Property

One of the tactics that might allow you to continue to enjoy your property abroad in the teeth of the economic gale sweeping the globe is renting it out. This might seem a bit defeatist if you bought the place as a bolt-hole from modern life that you could go to whenever you wanted, because you will now be able to use it only when it's empty.

But pragmatists might consider it better to have the property even if it's not always available than having to sell it at a loss. Most of the properties that we are talking about here are holiday properties as city buy-to-lets should be rented out all year round in any case.

Renting to Alleviate Negative Equity

A decision like this depends on the many aspects of your property abroad; the loan to value ratio of the property, the amount of capital you have tied up in it, and the renting capability of the property and the area, to name just a few. If you have borrowed heavily against the property and its value has dropped you may be in a negative equity position.

This in itself is only a problem is you want or need to sell the property, or if interest rates rise and you are paying a lot more each month. If you are intending to hang on to it for the long term then it's annoying, but negative equity in itself isn’t particularly relevant. In this situation letting the property will bring in income that might help you to hold onto it until values rise again.

Renting You Property Abroad Yourself or Through Agencies?

Renting the property out yourself is the simplest way but it may not bring in a great deal of business without significant time and money spent on advertising. Using family and friends to fill the holiday periods is all very well but they always expect a nominal rental.

On the other hand, renting out through agencies and holiday companies is more likely to guarantee top rates and fewer void periods, but you will lose a proportion of the income though their commissions. Perhaps the best approach is to try renting the property out yourself one year then using holiday companies the next, and compare the results.

One potential downside of using agencies is that their standards need to be consistent and high. They may demand you spend money on fixtures and fittings, possibly even repairs and renovations, before they will consider renting it out through their brochures and websites. This spending needs to be taken into account when calculating the cost-efficiency of renting through holiday companies.

Make Your Property Abroad Impersonal Before Renting it Out

One final thing to consider if you are considering letting out your second home abroad is to protect yourself and your possessions from the ravages of even the most well-meaning holiday guests. You will need to accept that things will get broken and misused, and if you have any personal possessions in the property that you would not like to get lost or broken then it makes sense to remove them, perhaps to a shed or outbuilding that can be locked up.

Buy plain crockery, cutlery, sheets, towels and all the other items that you are likely to need to replace yearly, if not before, and make sure they are freely available so that odd replacements can be bought. It's a relatively small investment that will help adjust to the idea of other people using your second property.