Rent or sell inherited house?
Discussion
My dad passed away recently and after iht is settled myself and my 2 brothers will be left with his house .
Is worth between 900 and 1.1 .lovely house ripe for a total refurb.
I am getting over him passing slowly. Had been a horrible time.we were close.
Anyway...
My gut is to sell his house once it comes to us and go our separate ways for all the following reasons,
Agent looked round it and rent after a light reburb would be approx2250pcm.
Divide by 3 and pay 40pc tax and letting agent fees etc= 450in my hand. This looks like a poor return to me.
Tenant hassle. More work.
Other negatives keeping the property would be we are tied together in an illiquid vehicle.
And i want to move house in the next couple of years.my brother dont.
1 brother wants to rent and the other is on the fence.
We already own 4 properties together and we rub along ok generally.
But this one is different.
Maybe the property will be worth alot more in 10 or 15 years but i think think the days of big uplifts are gone .plus 400pcm as an inheritance is poor imo.
And i have the feeling i will sort of miss out on my inheritance by getting a paltry 400quid!
Property is in south london.
With the money i would pay more into my pension and do isas and just sit on the money for a bit. Let the dust settle.
I am a higher rate tax payer and it seems renting is stacked against against me. Taxed at every turn.
I know i am in a good position financially but i do feel v house rich cash poor .
So PH .am i on the right track here or am i missing something. Thanks for taking the time to read here.
Is worth between 900 and 1.1 .lovely house ripe for a total refurb.
I am getting over him passing slowly. Had been a horrible time.we were close.
Anyway...
My gut is to sell his house once it comes to us and go our separate ways for all the following reasons,
Agent looked round it and rent after a light reburb would be approx2250pcm.
Divide by 3 and pay 40pc tax and letting agent fees etc= 450in my hand. This looks like a poor return to me.
Tenant hassle. More work.
Other negatives keeping the property would be we are tied together in an illiquid vehicle.
And i want to move house in the next couple of years.my brother dont.
1 brother wants to rent and the other is on the fence.
We already own 4 properties together and we rub along ok generally.
But this one is different.
Maybe the property will be worth alot more in 10 or 15 years but i think think the days of big uplifts are gone .plus 400pcm as an inheritance is poor imo.
And i have the feeling i will sort of miss out on my inheritance by getting a paltry 400quid!
Property is in south london.
With the money i would pay more into my pension and do isas and just sit on the money for a bit. Let the dust settle.
I am a higher rate tax payer and it seems renting is stacked against against me. Taxed at every turn.
I know i am in a good position financially but i do feel v house rich cash poor .
So PH .am i on the right track here or am i missing something. Thanks for taking the time to read here.
my sincere condolences for your loss.
A few years ago when my grandparents died my mother and her siblings had the same issue. Albeit a much less value house. My uncle, the eldest wanted his share for his own house issues.. where as the other 3 (including my mother would have preferred to rent it/keep it within the family)
Cue a few bad words and strained relations to end up selling it in disrepair..(the arguments meant it was left unoccupied for a couple of years)..
At the time i suggested the other siblings throw some money together and buy the eldest out.. but nobody wanted to listen to me.
Maybe this suggestion would work for you and your brothers. If they are able to buy you out your share, at once or say in a couple of payments maybe.
I would say do not let it drive a wedge between you, as inheritance seems to do.
A few years ago when my grandparents died my mother and her siblings had the same issue. Albeit a much less value house. My uncle, the eldest wanted his share for his own house issues.. where as the other 3 (including my mother would have preferred to rent it/keep it within the family)
Cue a few bad words and strained relations to end up selling it in disrepair..(the arguments meant it was left unoccupied for a couple of years)..
At the time i suggested the other siblings throw some money together and buy the eldest out.. but nobody wanted to listen to me.
Maybe this suggestion would work for you and your brothers. If they are able to buy you out your share, at once or say in a couple of payments maybe.
I would say do not let it drive a wedge between you, as inheritance seems to do.
My brother and I were in a similar position recently - we inherited our father's retirement apartment in Devon. It had been rented out but the tenants gave notice and left last November. The Covid restrictions made it very difficult to get new tenants in, which helped in our decision to sell instead. We had the additional costs of around £750/month to pay in service charge and council tax which was also a large factor in wanting to sell. I had thought of buying my brother out, but realistically I couldn't afford to live there. Ir sold 3 weeks ago and I'm looking to buy another home with the money.
Firstly, sorry for your loss.
Secondly, look at it as a business decision. If you were going to add to your portfolio, would you have this house or (say) three flats?
I wouldn’t let the house just because you happen to have it, as you’ll have a natural sentimental attachment to it which will make any tenant issues feel worse.
However, if you were looking to acquire a house in that area of town to let out then it’s a different situation, as you’ll have saved on transaction costs. You will need to carefully think about the sentiment angle though.
Secondly, look at it as a business decision. If you were going to add to your portfolio, would you have this house or (say) three flats?
I wouldn’t let the house just because you happen to have it, as you’ll have a natural sentimental attachment to it which will make any tenant issues feel worse.
However, if you were looking to acquire a house in that area of town to let out then it’s a different situation, as you’ll have saved on transaction costs. You will need to carefully think about the sentiment angle though.
ROI sounds poor in any case.
£2250/£900,000 ~ 2.5%
Just maximise value and sell.
Put costs through estate.
Then distribute to all three of you for cap gains purposes, and retain a part in the estate so you can claim costs back, and do the ascent at completion of sale to buyer.
Just to note, HMRC might not be happy with the last bit, but our solicitor and accountant were happy with it, so we’ve tried it, all likelihood is it’ll be fine.
Just a bit more cost on legals. Also buyers solicitors can be a bit crap at understanding it.
Plus sharing with siblings. Sounds great while it works.
With you all grieving in various ways in the coming years, I’d be out and running for the hills ASAP!
£2250/£900,000 ~ 2.5%
Just maximise value and sell.
Put costs through estate.
Then distribute to all three of you for cap gains purposes, and retain a part in the estate so you can claim costs back, and do the ascent at completion of sale to buyer.
Just to note, HMRC might not be happy with the last bit, but our solicitor and accountant were happy with it, so we’ve tried it, all likelihood is it’ll be fine.
Just a bit more cost on legals. Also buyers solicitors can be a bit crap at understanding it.
Plus sharing with siblings. Sounds great while it works.
With you all grieving in various ways in the coming years, I’d be out and running for the hills ASAP!
Others have given good advice.
My only 2p is my mum, aunties and uncle had a huge disagreement when my grandparents passed away.
What was a happy family turned nasty with 2 youngest against 3 oldest. Nasty things said and my mum didn’t speak or see to her eldest sister for 15 years!!! Myself and my dad told her to just go around, life is too short etc. Didn’t listen. Sadly the eldest passed away due to COVID a week before Xmas. My mum is devastated more the fact that she never spoke with her rather than the fact my auntie was alone in hospital with no one around. Mum also didn’t get to the funeral.
Life is way way to short and anything unexpected can happy COVID has shown that. Keep it civil.
At the end of the day it is only money.
My only 2p is my mum, aunties and uncle had a huge disagreement when my grandparents passed away.
What was a happy family turned nasty with 2 youngest against 3 oldest. Nasty things said and my mum didn’t speak or see to her eldest sister for 15 years!!! Myself and my dad told her to just go around, life is too short etc. Didn’t listen. Sadly the eldest passed away due to COVID a week before Xmas. My mum is devastated more the fact that she never spoke with her rather than the fact my auntie was alone in hospital with no one around. Mum also didn’t get to the funeral.
Life is way way to short and anything unexpected can happy COVID has shown that. Keep it civil.
At the end of the day it is only money.
There has been several threads about the pros/cons of BTL recently. This one has a good range of opinions:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
I agree with you and think the various tax and hassle aspects of BTL make it a no go. Especially if there is sentential value... How would you feel if tenants didn't treat the property well?
When we sold ours we approached the decision as "if we had £x would we buy this house and let it". Given the first post I think your answer is a resounding "no"!
https://www.pistonheads.com/gassing/topic.asp?h=0&...
I agree with you and think the various tax and hassle aspects of BTL make it a no go. Especially if there is sentential value... How would you feel if tenants didn't treat the property well?
When we sold ours we approached the decision as "if we had £x would we buy this house and let it". Given the first post I think your answer is a resounding "no"!
Thanks for the replies on this. Appreciate it.
Nothing has changed over the last few weeks. Property will be valued next week for the estate. Seems it will be 900 . Which is v Conservative V other properties for sale in the near area. But not for me to argue... if it gets sold once in 3 names there will be cgt to pay .a price i am willing to pay....
I still feel the same.
Any other opinions are welcome. Thanks.
Nothing has changed over the last few weeks. Property will be valued next week for the estate. Seems it will be 900 . Which is v Conservative V other properties for sale in the near area. But not for me to argue... if it gets sold once in 3 names there will be cgt to pay .a price i am willing to pay....
I still feel the same.
Any other opinions are welcome. Thanks.
Sorry for your loss. My brother and I were in a similar situation last year after my parents passed away. The house wasn't worth anywhere near yours but we thought about renting it out or selling. It needed a total modernisation and update so there would have been a lot of costs and effort. Selling was the easiest option. I'd definitely recommend selling and then if your brothers want to generate income from rental, they could use their shares of the proceeds to buy something else.
Sorry for your loss.
Those returns are very poor indeed. I’d be 100% selling it if I was you. If you really wanted that £750 gross rental per month you could take your £400k share, spend £150k of it on a small rental which should achieve £750. And you will still have £250k cash.
Best of luck.
Those returns are very poor indeed. I’d be 100% selling it if I was you. If you really wanted that £750 gross rental per month you could take your £400k share, spend £150k of it on a small rental which should achieve £750. And you will still have £250k cash.
Best of luck.
Sounds like you'd be in a good position to put it up for sale at a speculatively high price and see if you get a bite from someone('s missus) who SIMPLY MUST have it (darling). You might be able to swing your brothers into agreeing to try this, and if you get £1.2m you're all laughing. If you don't get high enough offers, well then just ask them to buy you out if they want to keep it. At that point they'll probably say b
ks, we'll sell it.
It strikes me that large houses are poor vehicles for rentals. If you've got a million, it'd be better to set up a LTD company and buy 8x £100k renters, and use £200k to indulge in some property development (this is a better scenario tax wise for a property company if it has an element of development thorugh the books, you pay lower taxes) your income would be far, far higher.
Sorry for your loss and all the best to you.
ks, we'll sell it.It strikes me that large houses are poor vehicles for rentals. If you've got a million, it'd be better to set up a LTD company and buy 8x £100k renters, and use £200k to indulge in some property development (this is a better scenario tax wise for a property company if it has an element of development thorugh the books, you pay lower taxes) your income would be far, far higher.
Sorry for your loss and all the best to you.
Edited by ElectricSoup on Friday 18th June 14:18
Edited by ElectricSoup on Friday 18th June 14:25
Not a nice situation, sorry to hear it.
I'm a little puzzled though by the valuation/rental, I'd expect a much higher rental on that valuation... Where in South London is this property, that could well be important, some areas IMO have some way to come up/i.e. are relative value vs others..
Re electric soup comment above - not always the case I think. There's a couple of houses on my street, also south London, probably worth a little more than OP's that are renting to sharers (that all seem to know each other, young workers etc) for 3800 or so per month. But again, this is why it would be useful to know where in South London it is. Some places have that potential, others don't.
I'm a little puzzled though by the valuation/rental, I'd expect a much higher rental on that valuation... Where in South London is this property, that could well be important, some areas IMO have some way to come up/i.e. are relative value vs others..
Re electric soup comment above - not always the case I think. There's a couple of houses on my street, also south London, probably worth a little more than OP's that are renting to sharers (that all seem to know each other, young workers etc) for 3800 or so per month. But again, this is why it would be useful to know where in South London it is. Some places have that potential, others don't.
Edited by okgo on Friday 18th June 14:24
davidc1 said:
Thanks for the replies on this. Appreciate it.
Nothing has changed over the last few weeks. Property will be valued next week for the estate. Seems it will be 900 . Which is v Conservative V other properties for sale in the near area. But not for me to argue... if it gets sold once in 3 names there will be cgt to pay .a price i am willing to pay....
I still feel the same.
Any other opinions are welcome. Thanks.
I've found from experience that estate valuations are a little on the lower end, but they are the experts!Nothing has changed over the last few weeks. Property will be valued next week for the estate. Seems it will be 900 . Which is v Conservative V other properties for sale in the near area. But not for me to argue... if it gets sold once in 3 names there will be cgt to pay .a price i am willing to pay....
I still feel the same.
Any other opinions are welcome. Thanks.
Thanks for the replies.
@Okgo, is se23 .
To add, A letting agent visited and advised 2k pcm as is. Or 2.5 lightly refurbed.
House is dated.
My friends referred to it 20 years ago as the 'heartbeat house' as you could have filmed heartbeat there as it looks like a 60s house! They still wanted to visit and supp my beers mind!
@Okgo, is se23 .
To add, A letting agent visited and advised 2k pcm as is. Or 2.5 lightly refurbed.
House is dated.
My friends referred to it 20 years ago as the 'heartbeat house' as you could have filmed heartbeat there as it looks like a 60s house! They still wanted to visit and supp my beers mind!
davidc1 said:
Thanks for the replies.
@Okgo, is se23 .
To add, A letting agent visited and advised 2k pcm as is. Or 2.5 lightly refurbed.
House is dated.
My friends referred to it 20 years ago as the 'heartbeat house' as you could have filmed heartbeat there as it looks like a 60s house! They still wanted to visit and supp my beers mind!
Fair enough. Depending what part I guess it's probably jumped a lot in the last few years, at that price unless its a fairly large semi/detached I guess it's probably as good as its going going to get for a time.@Okgo, is se23 .
To add, A letting agent visited and advised 2k pcm as is. Or 2.5 lightly refurbed.
House is dated.
My friends referred to it 20 years ago as the 'heartbeat house' as you could have filmed heartbeat there as it looks like a 60s house! They still wanted to visit and supp my beers mind!
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