Inheriting a property can present you with some challenges – not least that you need to make some big decisions, and at a time where you’re also dealing with the emotional side of bereavement.
You might also need to perform other financial tasks linked to the person’s estate. So it’s important to take time over any decisions.
On inheriting a property, there are essentially three options: selling it, living in it, or renting it out. Do bear in mind that if you sell the property you may have to pay Capital Gains Tax, which will eat into the money that you generate.
Renting it out might be a suitable alternative, but there are few things to consider:
Is there a mortgage on it?
If so, you’ll need to either transfer the mortgage into your name, if the lender is happy to allow you to run a buy to let. If not, you’ll need to take out a new loan.
You should also check the local market to make sure that the rent you can generate will cover your mortgage payments and the additional costs of renting out.
How much work is needed?
Not many lived-in homes are in pristine condition. To make sure you can rent the property quickly and get the best rent, it’s likely you’ll need to at least redecorate, and perhaps replace some carpets and curtains. Make sure you factor in the costs of this work in calculating whether it’s going to make financial sense to rent.
What’s the market like?
Do a lot of people in the area rent their homes? Do they fit a certain age group or social type? If so, you need to make sure your property will appeal to this kind of person. Have a look on Rightmove or another property website to get an idea of what’s out there and how quickly properties go.
Even better, talk to a local lettings agent, such as us, Progressive Lets – we can help and advise you.
Have you got the time and inclination?
Managing a property can be time-consuming. You need to attract tenants, show them around, run reference checks, manage deposits… and once they move in they will call on you for repairs and other issues. Alternatively, you can pay a letting agent to manage all of this and more, which takes the hassle away, but their fees will absorb some of the rent you generate.
Are there any other options?
Often, renting out an inherited property is the best solution, as it means you can benefit from the investment both in monthly rent and in growing asset value. But do make sure you’ve considered the other possibilities. Would you do better to rent out your current house and live in the inherited one, for example? Or is there greater demand for a different type of rental property? You could sell the inherited property and buy something else that has greater market appeal.
Whichever path you choose, we wish you the greatest success.