Inherited House Advice

Grogged

Hello,
Unfortunately both my parents unexpectedly passed in May.
I've inherited the house, along with my brother, where he lived with our parents.
Understandably he still wants to continue to live there, which I don't have a problem with.

I think we'll need to put things on a formal footing going forward once probate is settled.

I think these are my main options, I be grateful for any thoughts on these or other things to consider.

The most obvious option is for my brother to buy his share of the house. 
I'm not sure if that will be possible, he is in a secure job, but it may not be enough to cover the required mortgage.

The other main options would be for me to buy his share and let him rent, alternatively he could pay rent on my portion of the house.

Whilst I don't want to cause friction, it's a lot of money to have no access to or benefit from.

I presume whatever we decide will need to be legally formalised.

Thanks for your time.

Flugelhorn

it is a situation that can offer cause friction and one way or another you have a significant amount of money in the property - which you may or may not want to have access to at some time. it is much more difficult to be a "landlord" even for half a property when the other half is your brother.
The best bet would be for him to investigate mortgages, after all he has a lot of equity in the place. other option would be to sell it and he can buy somewhere smaller with the money, or perhaps go along with the renting half the place with a view to reviewing it in say 5 years ?

AdrianC

Grogged said:

Unfortunately both my parents unexpectedly passed in May.
I've inherited the house, along with my brother, where he lived with our parents.
Understandably he still wants to continue to live there, which I don't have a problem with.

I think we'll need to put things on a formal footing going forward once probate is settled.

I think these are my main options, I be grateful for any thoughts on these or other things to consider.

The most obvious option is for my brother to buy his share of the house. 
I'm not sure if that will be possible, he is in a secure job, but it may not be enough to cover the required mortgage.

What sort of value of property are we talking about? At most, he's going to need a 50% LtV mortgage, of course. Ultimately, of course you need and deserve some income from your money. But do you WANT to be a landlord, with all the rights and responsibilities that entails? Do you want all your equity tied up, or do you want to do something else with it? Can he afford to buy a smaller, more suitable place with his half of the equity?

Grogged

Thanks for your replies.
He'd be looking for a mortgage between £80-100k, depending on how how the markets have been impacted.
I don't think he'd want it longer than 15 years, otherwise he'd be retired.
I'm not sure if he'd be accepted as it's not a well paid job, but we will look at this when we get to talk about the future.

Ideally I wouldn't want to be a landlord, but would if that was the best option as I can't see anything changing for at least 5 years, if at all.

Slithery

Sell up and split the cash. It will be far less hassle in the long run.

dimbo61

Well if he works full time then he should get a mortgage of 4/4.5X income. 
Selling costs need to be taken into account.
Would you be happy with £60/80,000 ?
He needs a home and may leave the house to you in your will or the cat's home.
Selling and buying somewhere cheaper costs money.
Has he lived with Mum and Dad for years ? Did he look after them ?
Did he pay rent ? What does he do with his money !

Grogged

He's lived there a long time following a divorce.
They did not need caring for.
I don't know if he paid rent, I think he still spends a lot on his kids.
He has transferred the utilities and council tax to himself.

greatcrested

Step one is for him to find out if he can afford to buy you out. If he can (and he wants to), great.

Step two if he can't is NOT or you to become a landlord - you don't want t be one and tat's before you've investigated what's involved (which will further dissuade you)

So step two is for the Executors of your parents' wills to sell, and then distribute the money as per the wills.

He can then afford to buy somewhere smaller/cheaper.

FreeBear

greatcrested said: Step two if he can't is NOT or you to become a landlord - you don't want t be one and tat's before you've investigated what's involved (which will further dissuade you)

Another point to consider if going the LL route - If he is made redundant, the DWP may view it as a "contrived rental agreement". Then again, they might decide that as he owns half the property, he isn't entitled to HB at all.

On top of that, there is all the costs of being a LL (gas safety certs, EPC, building maintenance, insurance, etc). Income tax would be due on the rent, capital gains tax payable when the house is eventually sold... Selling your share to him now avoids all that.

xylophone

As a first step he could explore the mortgage option.
Is there any cash in the estate?
 

Grogged

Thanks everyone. 👍
I think I see a pattern here...

If he couldn't afford to buy me completely out, what's your thoughts on a partial buyout to start with?
TBH I'm not convinced as by owning the controlling share it could mean I had little hope of ever releasing my minority share.