4 things to consider before letting an inherited property
If you inherit a property, it may seem like the perfect opportunity to dip a toe into the rental market and earn an additional income.
In fact, choosing to rent out the property over selling may be a worthwhile decision that could lead to a sizable nest egg. You should consider taking tax advice from an expert who can consider your individual circumstances, with regards to any inheritance tax.
It is important to consider what you are getting into and the pros and cons that come hand in hand with becoming a landlord:
Is the property mortgaged and insured?
Can you refinance the property and take out some funds? You could then keep the property, rent it out and have some cash. A mortgage broker will advise you and help you understand if the property is suitable for financing and whether you could get a mortgage. You need a product that is suitable for buy to let properties. If you don’t do this, you could be in breach of the terms of your mortgage and risk the property being repossessed.
Is there a demand?
Demand for rented accommodation varies from area to area, so it is important to check whether there will be interest in renting your property before putting it on the market. If you have inherited a property in the area you are not familiar with, research the neighbourhood and understand the demographic you could be renting to (e.g. families, young professionals, students). This will give you an idea on whether there is enough demand available to rent out your property.
Is it in good condition?
The property may not be in a suitable condition to let out immediately. The property needs to be presentable to tenants and give the tenant good living conditions. The building itself, as well as the fixtures such as the kitchen and bathroom, may need upgrading. You must ensure that the electrics and heating are in full working order and that furniture meets fire safety standards. Unhappy tenants will only cause you further headaches in the long run. You have legal obligations as a landlord to make sure the house is safe.
Are you ready for the responsibility?
The biggest decision to make is if you think you are ready for the responsibility of becoming a landlord. This is not one to take half heartily as there may be more work involved than initially expected. A landlord must protect the tenancy deposit, follow government rules on rent, make sure the equipment for supplying water, gas and electricity is kept in safe working order and make repairs when needed. If you don’t live near the property you have inherited, you might need to think about how you plan on regularly managing it.
Finally, where some properties have been occupied by family before, some people struggle with the emotional burden of visiting a home that was once their parents or relatives.
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