Advice required re inherited property and buying out sister

voucherqueen42

We’ve thought about this Theoretica and agree it’s probably not a good idea.  Ultimately until they meet someone I’ve got a feeling they would be happy to live at home with mummy and daddy until they were 40!  I’ve always said to them late twenties is the time to start thinking of becoming independent. My brother in law still lives at home at 39 and that isn’t going to happen with them.  The money side of it would have to be properly thought through as we are not teaching them anything as the aim is to save a massive amount of money and then sell the property.  They could turn round and say can’t we just stay at home and do that? !

greatcrested

voucherqueen42 said:

I dealt with probate and the will so I automatically assumed the property was now ours 50/50. I did it online without consulting a solicitor as I was told it was straight forward.  I wasn’t prompted at any point during the process to get the name transferred. Am I being completely naive.?  Does this mean the property isn’t ours yet? We both had power of attorney too if that makes any difference?  

Once Probate was granted, your duty as Executer is to wind up the Estate, by distributing it in accordance with the will. All the assets, including the property, must be transferred to the Beneficiaries. The property cannot remain in the mae of either the decased, not the Executer(s).

Now, if a sale is being arranged, you can transfer the property directly from the deceased's name to the ultimate owner (rather than the named Beneficiary) provided the new owner/buyer pays the Estate the relevant amount.

So you instead of transferring the property from dad to you and sister, you could pay sister 50% of the property value and transfer it into your sole name (or joint names with your sons if that's what you choose).

But you cannot leave it in dad's name.

If you take full ownership, and allow sons to live there rent free, then there is no tenancy, provided sons do nothing to constitute 'rent in kind' eg capital improvements.

However, of the 126-odd laws and regulations that landlords must comply with, some still apply in this scenario. For your own sake it would be wise to act as if you were a landlord and comply with the relevant rules eg EPC, gas/electric  inspections, how to rent leafet etc

xylophone

For your own sake it would be wise to act as if you were a landlord and comply with the relevant rules eg EPC, gas/electric  inspections, how to rent leafet etc

The OP/ (her sister?) and formerly her father (strictly speaking) were/are landlords as the property was/ is  rented to students. It seems all necessary actions have been taken to comply with the law.

The property has been rented out to students for 3 years 
I totally understand the current tenants are tenants and all the necessary agreements are in place with the deposits protected etc etc all by the book.  

 The OP's father moved into care three years ago - for the two years before his death ,the rental income  belonged to him and contributed to his fees.

The rental income has presumably been accruing to the estate since then?

https://www.litrg.org.uk/tax-guides/bereavement/how-does-personal-representative-deal-income-and-capital-gains-arising-after

If the OP buys out her sister, she could grant her sons a tenancy agreement.

They could then take lodgers under the rent-a-room scheme?

greatcrested

xylophone said:

For your own sake it would be wise to act as if you were a landlord and comply with the relevant rules eg EPC, gas/electric  inspections, how to rent leafet etc

The OP/ (her sister?) and formerly her father (strictly speaking) were/are landlords as the property was/ is  rented to students. It seems all necessary actions have been taken to comply with the law.

The property has been rented out to students for 3 years 
I totally understand the current tenants are tenants and all the necessary agreements are in place with the deposits protected etc etc all by the book. 

Yes, presumably all necessary actions have been taken with regard to the current tenancy.

My point was that if the current tenancy is ended (or has ended?), and the sons move in, (and assuming ownership is not transferred to them), then even though they may not be tenants (no rent = no Consideration = no contract), the OP would be wise to continue to comply with tenancy requirements.

If the OP buys out her sister, she could grant her sons a tenancy agreement.
They could then take lodgers under the rent-a-room scheme?

OP was suggesting not charging the sons rent. Hence no tenancy agreement. If the sons pay rent, then yes, of course tenancy regs must continue to be adhered to.

Yes the sons could take in lodgers, irrespective of whether they pay the OP rent or not.

Provided the rent the lodger(s) pay goes to the sons (resident landlords) then rent-a-room applies.

If the lodgers paid rent to the OP (directly or indirectly), then they (the so-called 'lodgers') would be tenants!

voucherqueen42

My sister and I closed our father’s account where we were acting as power of attorney and opened a joint account in our names.  The rental income goes into that which we split 50/50. 

Ditzy_Mitzy

Sorry to hear of the bereavement. 
I'm confused: you mention your sons being possible tenants but also talk of lodgers, students and other tenants.  Was the house let whilst your father was in care?  And if so, are the students/tenants still there?  It's my understanding that a lodger ceases to be a lodger and becomes a tenant at the point the once resident landlord moves out.  

voucherqueen42

It’s tenanted until next June. We then want to buy my sister out once the students move out. 

greatcrested

Like ditzy I'm confused where the 'lodger' question comes from.

Or was that a possible future scenario once sons are living there?

As for the current tenancy, what makes you so sure it will end in June? The students may decide to remain......

getmore4less

You don't have to change the legal names on the land registry it makes little difference moving forwards other than you have to deal with it as executors in the future when the property is sold on.

The beneficial interest can be dealt with with you buying out your sister,  optionally sticking it in your name(s) at that point

Seems to be no benefit in passing it to the kids if they have FTB benefits they could lose and won't be considering this place long term

You then carry on as landlord for now collecting all the rent (taxable)

Once the tenants have gone move your kids in(if that is what they want) rent free 

KIds run the place, collect any lodger money (rent a room can be used by them)  but don't pay you anything

review later once kids are looking to move on

voucherqueen42

Thanks everyone for your replies.  It’s not been covered re stamp duty - someone said we would be liable for stamp duty by paying my sister 50%, around £125000. But if it’s done informally and not through a solicitor how would anyone know?