If you have inherited a house from a family member or friend, it can be really hard to decide what to do with it – especially if there’s other people involved in the decision. There’s often emotion and memories attached to the property that can make it difficult to face selling, but practical and financial situations can mean renting the property out or selling it is your only option.
In this article we explore the pros and cons of the various routes available to help you consider the best option for you and your family.
Renting Your Inherited Property
Renting - The Benefits
Renting out your inherited property can be a great option that will offer a regular income from as soon as the tenant moves in. It may be that the property you have inherited is already rented out and if so, you just need to ensure you are up to speed on your responsibilities as a landlord – including repairs, ensuring the property is gas safe and the furnishings are fire-safe. Find out more about being a landlord on the Residential Landlord Association website.
Regular rent payments are also easy to split across various inheritors is there’s others people involved and can be managed easily if one person takes control.
Renting might be a good option for you if its quite a bad time of year to sell and if you could do with a regular income quickly. It also gives you a route of making a profit while not having to part with a property that you may have significant emotional attachment to.
Renting - The Challenges
There are cons or challenges when it comes to renting out your inherited property and becoming a landlord. The property may require improvements or redevelopment before its ready to be rented out – which results in an initial investment which you may not have available.
Even if you are splitting the rental income among various inheritors, you will have to pay tax on any rental income you receive so that’s definitely something to take into consideration.
Depending on how close you live to the inherited property or how much spare time you have, you may have to recruit an agent to manage the property which can add to expenditure and impact the profit you make.
The final thing to consider is any issues with tenants. Though most tenants are respectable and will look after your property, but you have to be prepared that some tenants can cause damage to the building or the interior and you could be responsible for any damage made. If issues do escalate, the eviction process can be costly and stressful.
Selling Your Inherited Property
Selling – The Benefits
The main benefits of selling your inherited property is that you will receive a lump sum of cash that you can invest elsewhere or use towards purchasing a new home. If you are in the position where a lump sum of money would be helpful, rather then maybe a regular rent payment, then selling could the best route for you.
Depending on your route of sale, you could receive the cash quickly and hassle free – by selling with a cash buying company such as 321 Move, that could even be as little as 14 days.
Selling the property also means that there’s no hassle in making improvements and developments on the property to make it liveable or rentable and you don’t have to be concerned with rules and regulations around becoming a landlord. It is also easy to split the proceeds of the sale with other inheritors if necessary.
There’s also tax to consider and depending on value of the property, there is a chance you can sell and receive the profits tax free – without Capital Gains Tax.
Selling – The Challenges
The main thing to consider is that once you’ve sold the house, that is the price you have agreed on and there is potential you could lose out on making more money in the long run if the property increases in value down the line.
You will of course also lose out on long term and regular rental income if you decide to sell – and if the property is currently being rented out, you will usually need give notice to the tenants to give them time to find somewhere else to live. This is usually between 1-3 months depending on the tenancy agreement.
If you sell with an estate agent, it can be a time-consuming process – getting the house ready for viewings, making improvements so it attracts interest, and you can even be caught in a lengthy chain which can prolong the process.
There’s also the emotional impact to consider – which can be more contentious if there’s a few different people involved.
Living in the property
You could also consider living in the inherited property yourself. This may require you to relocate which will create new factors to consider such as finding a new job or schooling for children. Yet you could save money in the long run by not having a mortgage to pay in your inherited property.
If you would like to talk through your options, or would like to find out how much your inherited property is worth, contact 321 Move today.