HAVE YOU RECENTLY INHERITED A PROPERTY?

Have you recently inherited a property and you’re currently exploring your options? Although this can seem like a dream scenario for many people, there are different circumstances which could determine whether you sell or keep the property. In this blog, we look at different ways to manage an inherited property.

INHERITING PROPERTY WITH A MORTGAGE?

If you have inherited a property with a mortgage, then you will be responsible for the mortgage payments. It doesn’t matter if you do not intend to live at the property. Firstly, contact the mortgage lender to inform them of the previous owner’s death. In some instances, they might be willing to offer a grace period for the mortgage repayments.

What you do next will depend on your own financial circumstances. If you have also inherited a substantial sum of money, you could look at paying the mortgage off. If you are a beneficiary in a life insurance policy, then this might cover the cost of the outstanding mortgage. However, if you cannot afford the mortgage repayments, you might decide that it’s best to either sell the property or become a landlord and rent the property out.

HOW TO RENT OUT AN INHERITED HOUSE

If you’re the sole beneficiary, this process is easier, but if there are multiple beneficiaries, then you’ll need a legal agreement to rent the property out. Before you rent the property, you will need to change the mortgage into a buy-to-let. You will also need to pay rental income tax, insurance, and you’ll need to consider maintenance costs.

A common scenario is when people inherit property that needs significant repairs or modernisation before rental is viable. You will need to factor in renovation costs; however, refurbishments can be lucrative in the long term as this will increase the property value. It’s important to understand your figures before you commit to renting a property to decide if it’s going to be a worthwhile investment opportunity.

If you’re interested in keeping the property, but you don’t want the hassle of becoming a landlord, then it’s worth exploring a rent-to-rent option. This is when a third party rents the property from the landlord. As well as providing the landlord with a guaranteed income, they would also source and manage suitable tenants to live at the property. Any gaps in rental income would be automatically covered, which should cover the mortgage repayments.

INHERITING PROPERTY WITH AN ESTATE IN DEBT?

If you have inherited a property without a mortgage, but the deceased’s estate has significant debts needing to be paid, then it could be wiser to sell. If money’s tight, there are ways to sell a property without involving a costly estate agent. Depending on the property and location, we might be able to buy your inherited property.

Also, if the inherited property requires significant repairs or modernisation that you cannot afford, we may be able to refurbish and rent it out. There could be an option for you to sell the property to us or we might be able to manage the property and rent on your behalf.

If you’ve inherited a property and you’re exploring your options, please get in touch. to see how we can help.

Thank you for reading our latest blog, Have You Recently Inherited a Property?

RJJ Development