Renting joint inherited property to daughter

Anntay550

Hello everyone,
I am new to your forum, but have seen that you are able to offer some very useful advice and would really appreciate your input on the following.
My two brothers and I have recently inherited my late mother’s house. My older brother is executor of her will and probate has now been granted.
My brothers and I are in agreement that one of my daughters can buy the property. However, she is not yet in the position to get a mortgage.
Is there any way that she can rent the property from us until she can apply for a mortgage?

What are the legal implications and obligations involved?
How would we go about arranging the details?

It seems as if we have entered a minefield and are wondering where to go for advice. 

Any suggestions you can offer would be gratefully received.
Thank you

McKneff

I can't see a problem if allv3 of you agree but you have to remember you will be landlords and take on all the responsibilities that go with it, gas certificates,
Buildings insurance etc 

MaryNB

For all parties' benefit make sure you do a proper tenancy agreement. Helps avoid potential conflict further down the line. 

Anntay550

Thank you for your prompt replies McKneff and MaryNB, they are much appreciated, and have prompted some further questions.
I apologise if they seem rather basic, but as you have probably gathered this a completely new field for us.

Do we arrange a tenancy agreement through a solicitor, and does the rent need to be at market rate?

FreeBear

Have a read of the links in the first post here - https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

No, you do not need to involve a solicitor in drawing up a tenancy agreement.

No, the rent does not need to be at a fair market rate - But if the daughter is claiming benefits, you need to tread carefully.

Anntay550

Thank you very much FreeBear,
The link is really useful. A lot of information to take in.
My daughter isn’t claiming any benefits, but saving up for a mortgage deposit.
May I ask what the best way to draw up a tenancy agreement is?

Brie

No answers for the OP but I do wonder if there are any tax implications fro the 3 siblings who have inherited. 

If the daughter rents for 5 (or?) years before buying would they need to pay CGT? 

Should they have some legal document to log their agreement to wait for the daughter to be able to buy?  What if one sibling suddenly needs money?

rexmedorum

Brie said:

No answers for the OP but I do wonder if there are any tax implications fro the 3 siblings who have inherited. 

If the daughter rents for 5 (or?) years before buying would they need to pay CGT? 

Should they have some legal document to log their agreement to wait for the daughter to be able to buy?  What if one sibling suddenly needs money?

If you rent out a property and make more than £1000/yeat than yes you pay tax:
https://www.gov.uk/renting-out-a-property/paying-tax

gettingtheresometime

Wouldn't renting to your daughter be counter productive in terms of her being able to save for the deposit? How short of the deposit is she & how long does she envisage she'll need to save for to get it?

TripleH

You could buy a rental contractcfrom WH Smiths or a legal stationers once upon a time.

I can't comment on the validity of the documents but they were acceptable once upon a time. You don't need a solicitor or a letting agent as long as you know what your obligations are as landlords and you agree who does what in advance.

canaldumidi

* Each of the 3 landlords will need to submit a tax return declaring their rental income.

* If the property increases in value between the date of your mother's death and the date your daughter purchases, then each owner may need to pay Capital Gains Tax (as the property is not their main residence)

* there are several free tenancy agreements on the internet, of varying dgrees of quality and relevance. The gov also has a free model agreement (very extensive, delete irrelevant sections!).

* better still, join the national landlords association or British LA  (or a local one) which will have a TA. Or try Landlordzone.

* I'm assuming the house you inheritted is mortgage free?

* the 3 of you also need todiscuss and agree possible future scenarios eg if one wants/needs to sell; one divorces and their ex claims part of the property as marital assets; expensive repairs are needed;

As suggested above, read my thread above for help on leglislation, rules, advice and further links:

Tenancies in Eng/Wales: Guides for landlords and tenants

Post 2: Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new tenant protection (2015) plus the Homes (Fitness for Human Habitation) Act 2018

Post 3: Deposits: Payment, Protection and Return.

Post 4: Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

Post 5: Rent increases: when & how can rent be increased?

Post 6: Repossession: what if a LL's mortgage lender repossesses the property?

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?