What to Do with an Inherited Property: Keep, Sell or Rent?

A death in the family is always a shock. It can thrust you into a whirlwind of 1000 questions you’re not sure you have the answers for. One of these is what to do with someone’s house when you inherit it. After inheriting a property, you’ll need to decide whether to keep it, sell it or rent it out. Each of these options has its own distinct benefits and drawbacks. There’s a lot to consider, from the mortgage situation to your tax obligations. In this guide, we’ll explain what happens after inheriting a house in the UK. We’ll then discuss whether moving in, selling or letting the property would be best for you, and what makes a guaranteed rent service a viable choice.

What Happens When You Inherit a House?

When the owner or a house or flat passes away, their property belongs to whoever is named in the will. If there is no will, it will usually pass automatically to their spouse and/or children. Otherwise, you’ll have to apply for a “Grant of Representation.” As the beneficiary, you must usually pay inheritance tax on inherited property (which varies according to the home’s value). You must also settle certain debts associated with the house. If there is a mortgage, you should speak to the lender before deciding whether to sell or rent inherited property. Sometimes, the owner’s life insurance policy will cover whatever is still owed. Otherwise, you’ll be responsible for paying it off.

Should You Keep, Sell or Rent Out Inherited Property?

The question of what to do with inherited property can be a tricky one. Is it better to sell or rent an inherited house, or move in straight away? Each option will have benefits and downfalls that you’ll need to examine closely. Everyone’s situation is different, so what works for someone else might not suit you.

Moving Into an Inherited Property

Moving into a house you inherited may be a great option in certain circumstances. For example:

• You were previously renting and wish to get onto the property ladder
• The property is situated in a good residential area
• It’s a family home that holds personal meaning to you

In this case, you’ll need to consider a couple of things. First, you’ll need to transfer any mortgage on the home into your name, or pay it off entirely. Also, you’ll need to make sure you can afford to live there. The bills, including council tax, may be higher than what you’re used to paying each month.

Selling an Inherited Property

If you’ve inherited a house and want to sell it, there are a few things to consider. First, it will only be possible if the property isn’t mortgaged, or the house’s sale price would cover the remainder. Some cases may even necessitate the sale – for example, if you aren’t approved to take over the mortgage. Before selling an inherited house, it may be worth renovating or redecorating it. Modernised properties will usually fetch a higher price. It may also make it easier for you to find a buyer. However, it’s important to consider the tax implications. You’ll have to pay Capital Gains Tax on any profit you make from selling inherited property. Depending on your taxpayer bracket, this could be as high as 28%.

Renting Out an Inherited Property

If you’d rather not sell the property nor live in it, you may wonder: can I rent out my inherited house? Letting a second home offers several great benefits:

• You can keep the house in the family without having to move
• You can avoid the hassle of selling while still making a profit from the property inheritance
• You won’t have to pay Capital Gains Tax (only income tax on whatever you earn from rent, minus any expenses)
• You can choose between renting out inherited property as a long-term residential let or short-term holiday let

Over time, the capital you earn from rent could amount to more than what you’d make from selling straight away. You can rent out an inherited property for as long as you want, whether that’s one year or several decades. Then, you can choose to sell it, move in or pass it on to another family member. If there’s a mortgage on the home, make sure its terms and conditions allow for you to let it out.  Otherwise, you may have to get it re-mortgaged before putting it on the lettings market.

What Is the Best Way to Rent Out an Inherited House?

Letting out an inherited house is often the most appealing option. However, being a landlord does involve a lot of responsibility. You’ll have to find reliable tenants, keep the property maintained and be available 24/7 in case of emergencies. There’s also a risk that the occupants won’t pay their rent on time. If you’re looking for a secure, stress-free way to let an inherited property, guaranteed rent is a great solution. This involves making a long-term agreement with a company who will manage and sub-let the property. They’ll pay you a guaranteed monthly rent even when the home is vacant or when the tenants don’t pay. The guaranteed rent company will handle everything for you, from liaising with tenants to dealing with repairs and evictions. This leaves you free to relax and enjoy a steady rental income.

Contact 53 Degrees Property Today

If you’ve recently inherited a property, turning it into a rental with a guaranteed income could be a great idea. You’ll always receive regular monthly payments without any of the hassle or risk. At 53 Degrees Property, we offer guaranteed rent for landlords in flexible contracts ranging from 3 to 5 years. You can find more information about how guaranteed rent works here, or learn about the many benefits of guaranteed rent schemes here. Contact 53 Degrees Property today and find out how much you could earn. Give us a call, fill in our online enquiry form or send us an email or text. Our helpful team will get back to you with an estimate as soon as possible.