What to do with an inherited property?

Although inheriting a property can be a surprise, around 43% of Britons expect to inherit property in their lifetime. According to the latest figures, homes are the most commonly inherited asset.

Inherited property offers a lot of possibilities for you and your family. But before you can enjoy the benefits, quite a few questions need to be answered regarding the property’s legal status and much more. Here we look at what’s involved with inheriting a house.

 

I’ve inherited a property – what now?

 

There is a host of legal matters to deal with when it comes to inheriting a property, so be sure to check that all have been checked and completed before you move in or sell:

 

Check the will

 

Verify if you are the executor or beneficiary in the will. If a will doesn’t exist, the law determines who gains inheritance. A ’grant of administration’ can be applied for by the next of kin to prove their legal right to deal with estate affairs.

 

Probate details

 

This is when the executors deal with the deceased's affairs, which can take some time to complete. All deceased assets, including money and property, are assessed, and the money is used to pay any outstanding taxes or bills.

 

Mortgage status

 

Check to see if the property has a mortgage attached to it. If there is, most will have a grace period where repayments are suspended until the estate affairs are finalised. You will take on the mortgage payments once the property legally becomes yours.

 

Ownership transfer

 

If the property is sold or mortgaged, you can register the property at the Land Register once probate is finished and ownership is transferred to you. This ensures you have clear proof of ownership for anything you decide to do.

 

What taxes are due on an inherited property?

 

There are a few different types of taxes to pay on an inherited property:

 

Capital gains tax

 

If you sell, you may have to pay capital gains tax on the property, which varies depending on the sale price.

 

Inheritance tax

 

If the estate (including shares, property, savings and other assets) is valued at over £325,000, you must pay inheritance tax.

 

Income tax

 

This is due on any rent income you receive if you have inherited a buy-to-let or holiday home.

 

Transfer ownership of an inherited property.

 

The probate process involves transferring property ownership into the beneficiary’s (your) name. You send an application form to the Probate Registry and are required to fill in three forms to transfer the property:

 

·       AP1 (Application to Change the Register) is crucial for almost any modification to the Land Register, including ownership transfers, name changes, registration of mortgages, or cancellation of charges.

·       TR1 (Transfer of Whole of Registered Title) is the main form used to transfer ownership of an entire registered property from one party to another, whether through a sale, gift, or other methods.

·       ID1 (Verification of Identity: Citizen) is used to confirm the identity of unrepresented parties involved in Land Registry applications, helping to prevent fraud and maintain the register's integrity. It requires verification by a solicitor, conveyancer, or other approved professional.

 

You then pay the relevant fees and submit the form to the Land Registry. The transfer should take 5-6 weeks to complete.

 

Shall I keep, sell, or rent out the property?

 

Whether to keep, sell or rent out the property is the next decision you will have to make. Some things to consider include:

 

Move into the property.

 

You could move into the property yourself. Generally speaking, this is unusual, as only 12% of those inheriting property intend to use it as their primary residence.

 

If the property has a mortgage, it will have to be transferred into your name. This requires you to undergo the usual credit and affordability checks to ensure you can afford the mortgage (if there is one). However, moving in and calling it your home could prove difficult if you have a strong emotional attachment to the property.

 

Selling the property

 

Selling the property will likely involve a lot of work, as you must ensure it is in a sellable condition. This means decluttering, cleaning, and redecorating, if needed. However, selling has a significant upside, as you can make a healthy profit once it is put onto the market.

 

While selling the property may seem like a sizable task, working with a reputable agency like Squires can make things more manageable. We can give you a free valuation of the property, offer guidance on staging it, market it to attract serious buyers, and make the entire process far less stressful.

 

Letting the property

 

Another option is to let the property be used for people to live in. This means you become a landlord and are responsible for maintaining the property and all the associated health and safety checks. It allows you to enjoy a long-term income from your tenants, which could be used to pay off any outstanding mortgage or put towards a pension, for example.

 

As a first-time landlord, I know there is much to take care of before and during the tenancy. Squires can provide a full property management service that makes it much easier to be a landlord, deal with tenants on your behalf, collect rent, and maintain the property’s condition. At the same time, you always have the final say.

 

At Squires Estates, we pride ourselves on our honesty, experience and customer service. With over 20 years in the property game and over 80 years combined experience, we have certainly dealt with our fair share of inherited properties. If you have any questions regarding your circumstances or inherited property and want some honest advice on whether to sell, rent, or even move into it, we will gladly help. Whilst regulated by The Property Ombudsman, we are trained to offer you the best advice for your circumstances, whether you live in Finchley, Hendon or Mill Hill. Get in touch with us today!