Waiting for the economy to pick up? Why not rent out your home for 12 months and escape abroad
Zoe Dare Hall – The Times
You wait all year for it - the holiday abroad – then, before you know it, you’re back where you started. At home, it’s raining, the tan is peeling and all memories of watching the sunset while sipping a glass of local vino are fading. A growing number of Britons, however, are keen to keep the holiday spirit going. Fed up with the inclement weather and the gloomy economic climate, they are heading abroad not merely for the summer, but for a year or two. Call it a grown-up gap year, if you will.
“We feel an absolute sense of escape from the gloom and doom at home,” says Marie McLaughlin, one of the world’s leading operatic sopranos. Although she travels extensively to perform in opera houses around the world, from the New York Met and the LA Opera to Covent Garden and the Vienna State Opera, she is leaving Kent and heading to France for the foreseeable future.
“Here, we have sunshine, great food and south-facing views across idyllic countryside,” she explains. “With its all-white interiors, our French home is the antithesis of our dark, wood-panelled English house.”
For the next year or two, McLaughlin, 53, and her husband, Peter Nardini, 58, are swapping their Grade I-listed 16th-century manor house in Hollingbourne, near Maidstone, for their farmhouse in the village of Chervettes, near La Rochelle. Since they bought the property in 1996, the couple have renovated the main five-bedroom house; now that their two sons, Marco, 26, and Luca, 18, have flown the nest, they are heading back to complete the work.
“It has been a humongous job so far – we’ve spent about £150,000 just doing it up – but we speak French and used local people, which has made us feel welcome in the community,” says McLaughlin, who plans to open a singing school and 500-seater concert hall.
How are they funding it? By letting out their UK home to take advantage of rising rents. The couple had tried to sell, but, despite dropping the price of Hollingbourne Manor from £1.4m to £1.25m, they have seen four offers fall through.
“Then we questioned whether we really wanted to sell a piece of history anyway. We decided to hold on to the house and rent it out,” says McLaughlin, who currently lets the adjoining two-bedroom Victorian cottage for £1,000 per month and is seeking tenants for the £3,275-per-month manor house, which is decorated with Italian Renaissance paintings, chandeliers and four-poster beds.
Daniel Day-Lewis recently spoke of “fallow fields” – about taking time out to step back and catch up with yourself, live life, have experiences, all of which feels impossible in the middle of juggling the school run, shopping and e-mail demands via your BlackBerry. It’s no surprise, then, that the idea of taking a grown-up gap year appeals to ever more of us – fortysomethings seeking long-overdue career breaks, baby-boomers wanting to make up for lost time, or young families wanting to give their preschool children a taste of foreign life.
“It’s a case of having your cake and eating it at present, as you can benefit from rising rental yields in the UK by letting out your home, keeping in the property market and earning an income to finance a lifestyle abroad,” says Mike Goddard, CEO of Belvoir Lettings, which has more than 130 offices nationwide.
Hollingbourne may be a grandiose example, but the property-market slump is seeing all manner of homes that won’t sell being rented out instead – and their owners seeking an alternative lifestyle overseas. The currency specialist HiFX reports that while emigration inquiries in the first six months of this year were 30% higher than for the same period last year, actual transactions were up by only 10%. It attributes this primarily to people being unable to release equity by selling their home.
The principle is straightforward. The average UK rental yield is currently 6.4% – the highest since February 2006, according to Paragon Mortgages – so a £500,000 property could bring in more than £2,600 a month gross rental income. That’s enough to rent a four bed flat overlooking the bay in Puerto de Andratx, Mallorca. You can let your two-bedroom semi in a well-to-do suburb of a northern city and, for the same money, rent a two-bedroom flat near Chianti, Tuscany (www. yourwaytoflorence.com); or swap life in a fourbed terrace in Clapham, south London, for a three-bed sea-view flat in Dubai.
Applications for long-term lets have risen sharply in the past 18 months. Ross Husband, who founded Rent a Place in France three years ago, says that his company’s website received an average of 15,000 hits a month at the end of last year; last month, it was 21,000. “As the sales market was affected back home, the rental market grew stronger,” says Husband, who is based in the Pyrenees and lists more than 300 properties in France. “It’s time to have a good break, relax, find the house you want or sell the house back home for the price you want.”
While your money will stretch much further if you rent out in pounds and head to a dollar-based or non euro country, the weakening euro is making the move to Europe less punishing for Britons than it has been so far this year.
Rob Smith, a London property developer, and his wife, Amanda, who runs Trading Spaces, an estate agent that specialises in loft apartments, have decided that now is the time to take a sabbatical from their work, which has brought in next to no income this year, and sail around Greece and Turkey until the UK property market picks up. They have let out their two-bedroom Victorian terrace in Balham, south London, for £3,000 a month and, having arrived in Turkey earlier this summer with a budget of £40,000, have bought a Sun Odyssey 35 and are ready to set sail.
“We usually go sailing for two weeks every year, and had always thought that one day we might just take off for a few months or more,” says Rob, 49. “Without the credit crunch, we wouldn’t have been able to extract ourselves from our businesses and do what we’ve always dreamt of doing.” The couple’s home was valued at £1.15m last August, but failed to attract offers above £700,000. The plan, if there is one, is to spend the winter months in Marmaris, Turkey – enjoying temperatures of up to 21C – then just see what happens.
“It was a choice of sitting in poverty in London on zero income and keeping Amanda’s business ticking over, or taking a gap year until the UK property market picks up,” he adds. “Most of our friends would love to do this, but mortgages and family commitments stop them. It would have been nicer to have sold our house, but we still have our assets and options.”
Paul Edwards, 39, has also sought a sunny way out of the stagnation. When his buy-to-let investments in Cardiff struggled to pay the mortgage and price growth looked hazy, Edwards let his six-bedroom Edwardian semi in the city for £1,200 a month and headed to Palma in Mallorca with his wife, Sian, 38, and their five children, aged 3 to 13. He now runs the website Palmarental.com.
“The buy-to-let market is still buoyant here, so I’ve bought five two-bed flats in the old town, near the cathedral, which rent out for £560-£725 a week,” says Edwards. Midweek, he is running around a sun-soaked football pitch with his children. Home is a five-bedroom villa with a pool in Santa Ponsa, which he bought three years ago for £423,000.
For some, of course, the temptation is too much – leases are renewed, the stay is extended and the move back to Blighty is put on hold.
“We rented out the property in case we wanted to return, but I’d had enough of the UK,” Edwards says. “In Cardiff, the kids would come home from school, have tea, watch EastEnders and go to bed. Here, they are outdoors all the time. They go to Spanish schools and have a great way of life.” Rental rules while you’re away
As a property landlord, you need your paperwork in order. From October 1, it will be compulsory to have an energy performance certificate. “You will also need a gas safety certificate, and an electricity certificate is advisable,” says Kate Faulkner, managing director of www.designsonproperty.co.uk.
If you are living abroad, opt for full management of your property: someone who will take control of your inventory and tenants.
In London, demand for rental homes still outstrips supply. The average house in the capital rents out for £3,000 a month (the figure is £931 outside the southeast), according to the Association of Residential Letting Agents.
Elsewhere in the country, says Belvoir Lettings, the highest demand is for three- or four-bedroom houses in rural market towns and places within an hour’s commute of London, which go for £500-£750 a month.