Property  

What are the options after inheriting property?

This article is part of
Guide to unexpected property ownership

What are the options after inheriting property?

The options available to clients who have unexpectedly inherited a property may seem obvious.

Most people will think the main decision to make is whether to sell the home, or keep it to live in or rent out.

But, in fact, the options are often far more complex than that, particularly if the house has been left to more than one person.

The situation is usually complicated by the fact that the reason most people are suddenly left with a property is because of the abrupt death of a family member or loved one.

Simon Heawood, chief executive at Bricklane, says: “It’s important to remember that inheriting residential property can be an emotional experience as well as a financial one. 

“The inherited property may well have been a family home rather than an asset purely for investment. This can become even more complicated when there are multiple heirs who are each likely to have a different financial outlook.”

He suggests the first thing to do is to get advice.

“It need not necessarily be just from a financial adviser – a solicitor may be the right first port of call to understand the legal position of the property, and to structure and administer ownership of the property if you intend to hold it,” he explains. 

“Where properties are inherited, there is no stamp duty to pay, but there may be other considerations specific to your situation, particularly if structuring between heirs is a consideration, or if legal structures such as trusts are involved.”

Mr Heawood confirms once ownership and tax position has been established, there are clear options in the short term.

“The property could be sold on the open market or kept as a buy-to-let, but beware the tax-implications. 

“There might be options to ‘keep the property in the family’ – whether by one party buying out another, or one renting off the group. If you pick this latter option make sure there is clear agreement across heirs, if possible with written legal contracts,” he insists.

Location, location, location

The decision to sell the property might be a fairly straightforward one, particularly if the clients who have inherited a property already own a house and the location of the inherited home is not suitable, even as a second home.

David Hollingworth, associate director at London & Country, says the decision will come down to individual circumstances but age may also be a factor.

"A would-be first-time buyer may suddenly inherit a property that gives them a ready-made home, but in many cases it’s more likely to pose the question of whether to sell the property," he suggests.