Inherited half a house rent/sell/etc

Frames84 · 12 July 2018 at 11:07AM

Hi,

My father passed away at the turn of the year and my sister and I are finally ready to start sorting the estate out. Looking at it there is a property worth about 100k and cash assets of 120k. We're going to seek financial advice but I was hoping if anyone one here as been throught he same situation or any general advise. No inheritance tax is liable with the estate total value 220k-ish

My personal situation, I live with my partner and 2 young children (1 and 7) in the north west UK, no debt, work freelance but never struggle for work some savings which would last me 3 - 6 months if the world fell in. I have a mortgage of about 110k which is a replayment mortgage for another 23 years and I'm in my mid 30's.

So my sister and I could sell the property and I could clear my mortgage.

I could invest my share/ pay down my mortgage of the 60k and we could rent the property out. The property would rent for about £550 a month - 6600 per year. I'm awful at DIY and don't have time so would likely get someone to run it for me. A good year would be around £2500 each which would be taxable, leaving a £1200 for insurances/ fixes/ maintenance etc.

No experence of being a landlord so I guess I need to look at what entails.

I feel very fortunate that my dad has left us this so just hoping for anyone with any relative situation or areas I may not have looked at.

Thanks
Frames

foxy-stoat · 12 July 2018 at 11:20AM

Sell and clear your mortgage - put some money into savings accounts for your children, they will need as much as they can to get on the ladder in years to come.

Buy a nicer car and have a holiday.

Sorry for your loss as well.

Mojisola · 12 July 2018 at 11:24AM

Renting out a property that you have an emotional attachment to can be difficult. How would you feel if tenants didn't look after what had been your father's home?

Before you inherited this house, did you have an interest in becoming a landlord?

lisyloo · 12 July 2018 at 11:46AM

Being a landlord is a significant job.
You have responsibilities for people's lives literally.
You have to do things such as gas safety certificates (not done can be fatal), comply with money laudering regulations and make sure you don't let to someone without the right to be in the country.
You will need to do maintenance and repairs, sometimes this may be at short notice e.g. if there is a leak or no hot water.
Tenants may be difficult e.g. call you at 4a.m. they could cause damage.
Of course that is the downside and usually the worst doesn't happen.

In order to make the best decisions financially you'll need to research how to hold the property (singly, jointly, in the name of a non-taxpayer, or a ltd company). Pay the correct amount of income tax or CGT.

It can work out well, but you should not be under any illusion that this is a hobby.

Personally I never wanted to be a landlord and wouldn't have wanted to put the time in on top of a full-time job.
People that did have done well, but you have to be prepared to do the work.

You should also not expect tenant to treat the place with the love and care that they would with their own home e.g. wear and tear will be greater.
In between tenants you'll need to maintenance perhaps more that you'd put up with in your own home (or lower the rent if it's a bit tatty).

xylophone · 12 July 2018 at 11:51AM

Does your sister want to be a landlord? Do you?

If you sold the property, you could clear your mortgage and invest what would have been your monthly mortgage payment into a stocks and shares ISA/your pension/ JISAs for your children etc.

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

http://monevator.com/using-vanguard-lifestrategy-funds-life/

AnotherJoe · 12 July 2018 at 11:59AM

Similar comments to everyone else, I'd say pay off half your mortgage*, pay more into a pension, put some away in investments/savings, have a nice holiday or two. And dont get into the landlord business unless its always been your ambition.

* because mortgages are cheap at the moment and putting money into a pension will be much better financially and pay off what seems like a long time away but doesn't in retrospect when its time to retire !

Cakeguts · 12 July 2018 at 12:23PM

One of our ex tenants called the emergency letting agents phone line on Christmas Day to report that their kitchen sink was blocked and could they have a plumber to fix the problem. The tenant had caused the blockage by pouring fat down the sink. This is the kind of rubbish that you have to expect as a landlord.

Frames84 · 12 July 2018 at 1:58PM

Hey all!

Thanks for the replies, some good comments and I am leaning towards selling and trying to clear my mortgage. We're down to speak to a FA so I'll see what they say.

Thanks

Sea_Shell · 12 July 2018 at 2:11PM

Another vote here for sell.

Margot123 · 12 July 2018 at 3:15PM

Cakeguts wrote: »

One of our ex tenants called the emergency letting agents phone line on Christmas Day to report that their kitchen sink was blocked and could they have a plumber to fix the problem. The tenant had caused the blockage by pouring fat down the sink. This is the kind of rubbish that you have to expect as a landlord.

Can relate to that!
My tenant demanded everything under the sun including a carpenter to fix a squeaky toilet seat. He also wanted lead replacing from a bay window as it was 'making the property uninhabitable'; turned out that he had stolen it (proven via Smartwater)!!!!!

PLEASE READ BEFORE POSTING

Inherited half a house rent/sell/etc

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free