It can be tricky to decide what to do with a property you have inherited, particularly if it was once a childhood home. And if the home is a shared inheritance, you will have to agree with the other beneficiaries as to your next move and put that decision in writing via a solicitor.
Is it best to sell an inherited property or move in, do it up or let it out?
There are generally three options as to how to deal with an inherited property – sell it, move in or carry out renovations and let it out.
Moving into an inherited property
If you want to move in, then you will usually either rent or buy the remainder from your other beneficiaries. It’s therefore a good idea to have the property valued by an independent local agent or surveyor so there aren’t any disagreements about what you need to pay.
Selling an inherited property
Inheriting a property can be both a blessing and a burden. While it can provide you with a valuable asset, it can also come with its own set of challenges, particularly when it comes to selling the property. If you’ve recently inherited a property and are considering selling it, here are some things you should keep in mind.
First, it’s important to determine the value of the property. This will involve getting an appraisal or speaking with a real estate agent to get an estimate of what the property is worth. Understanding the value of the property will help you determine an appropriate asking price and ensure that you are not underselling the property.
Next, consider the tax implications of selling the property. Depending on where you live, you may be subject to capital gains taxes on the sale of the property. It’s important to speak with a tax professional to understand your obligations and ensure that you are in compliance with all applicable laws.
Once you have a good understanding of the value of the property and your tax obligations, you can begin the process of selling the property. This may involve working with a real estate agent, listing the property on online marketplaces, or exploring other options for selling the property.
Remember that selling an inherited property can be a complex process, and it’s important to be patient and do your research to ensure that you get the best possible outcome. With careful planning and preparation, you can successfully sell your inherited property and move forward with your financial goals.
Securing a mortgage
If as the sole owner you intend to sell or move in yourself and secure a mortgage to release some equity, the house will need to be registered in your name via the Land Registry.
However, if the property is currently mortgaged you will need to check whether an insurance policy covers the amount of money currently owed.
If there is not, then you will need to contact the lender and talk through what happens next. If you wish to retain the house and need a mortgage, it’s advisable to talk with an independent mortgage broker such as Mortgage Advice Bureau so that you know all the options available.
Does the house need any renovation, such as making it legal to let?
Redecoration is one thing but there may be lots of hidden costs, particularly if don’t know much about the property.
You can’t or shouldn’t just move in or let it without checking it’s safe for you to do so or let it legally to a tenant, even if it’s a friend or family member.
An RICS or RPSA surveyor can save you a lot of time and effort in determining what has to be done. If you move in yourself, then do get an additional survey on the gas and electrics, if letting, this is essential as you will need safety certificates to let it legally.
Time and money
If decide to let the property, it will need regular maintenance, and should anything go wrong you will need to have enough money to pay for the costs. Over time this may cost tens of thousands of pounds for things such as a new boiler, roof or windows.
Property, eventually is nearly always a good investment for the future. Letting can offer a consistent income, but the cash you earn will be taxed and a portion of any profit on the property when you sell it is likely to be subject to Capital Gains Tax (CGT).
Bear in mind that the extra income from the property could mean you lose some tax benefits you currently receive.
Before you decide to keep the property and make money from it, look into the tax implications with an independent financial advisor.
When you inherit a property you also take on responsibilities. For many people, the best option is to sell the inherited property to pay off any existing mortgage.
However, it could be a challenge to prepare for and manage the sale. Some companies can give you the option to avoid the hassle of traditional house-selling methods and offer to buy your inherited property for their own portfolio.
Will you sell an inherited house that needs improving?
Some companies have the option where the company invests in renovating the property.
This involves purchasing the majority of the property leaving the beneficiary to keep hold of the remaining equity and using it as a passive property investment.
Make sure you engage with a company that specialises in buying inherited properties that are difficult to obtain a mortgage on because they are in a poor state of repair.