Brother buying my out of inherited property

[sassyx]

Hi just looking for some advice so I have some background knowledge before seeking legal advice.

My brother and I inherited our late mother’s house which had no mortgage on. This was just over 2 years ago. Cutting a long story short, he was still in school at the time with no job and I was (still am) renting. So in a time of grief it wasn’t spoken about and it only felt right to let him continue living there. Fast forward to now, brother has a job, partner etc and I’m still renting with my own family now. He wants to stay there and I would like my share to buy my own place. How does this work? All I know we need to get 3 different valuations and go in the middle, he won’t beable to afford to buy me out, so I’m just assuming he will need to get a mortgage with the half that I’m owed... is it a long process? Say the house is worth 250k will I get 125k or are there any fees I need to think about ? Also the money I will get, will that go into my bank or do I need to find a property to transfer it into? Completely oblivious to all things mortgages as I’ve been renting, so apologies if stupid questions!

T.I.A

Your brother would need to ensure her can get a mortgage for his half. If he can't then the other option is to sell it and he buy something he can afford.

He needs a mortgage and a solicitor. You need your own solicitor.

Once the sale is completed they will pay the money in to an account of yours.

You will get half the value of the house minus any legal fees you incur. A she is your brother you may want to share those.

But he will need a mortgage for your half of the house, it's full value, minus any deposit he has.

Your money will be put into your account, to spend as you see fit.

Any good solicitor will be able to explain this to you and get it sorted out quickly. They see similar situations all the time.

You can relax.

He will have to get a mortgage to buy you out, any fees associated with that are his to deal with.

If the value of the house has increased since it was valued for probate, you could be liable for Capital Gains Tax. This has to be dealt with within quite a short time frame of you getting the money. More info here: Capital Gains Tax: what you pay it on, rates and allowances: Overview - GOV.UK (www.gov.uk)

The money you receive is yours to do what you want with: it will be paid by your brother's mortgage provider into the solicitor's account (the one dealing with the property transfer) and they will then pay into your bank account, you don't need to be buying a property immediately and can just park it in a high interest savings account.

Thanks for your quick replies helps a lot! We had to have it valued shortly after mum passed away so we do have an idea of how much it's worth but added some extra on due to inflation, with our guesstimate which is 50k higher than the first valuation couple years ago, he can afford a mortgage of that, if it's any less than obviously that won't impact it but again, will get another recent valuation to confirm

Forget what it was worth two years ago. You each inherited half of it, and own half of what it is worth now.

@furtivetussling I'm aware of this as said in my PP. I took old valuation, added some on with it being 2 years since old valuation to get a guesstimate and said I would get a more recent valuation to confirm.

He will need the mortgage to pay you, so it needs to be for half of the current value of the house whether it's increased in value or not. So if the house is worth £250k, you will receive £125k (less your share of the fees) into your bank account as cash. You can do what you want with it. You need to appoint a solicitor or conveyancer to do the legal side and they will talk you through all the steps. For a house of this value, fees will probably be £1,500ish, which the solicitor will deduct and pay for you before sending you your money.

Get it revalued and he buys your half of it at the current value. You say he can afford it based on the old valuation, it’s unlikely to have risen much given the state of the market. If the affordability for the mortgage includes his partner, then their mortgage will need to tenants in common with unequal shares to protect his contribution should they break up.

It will be much easier to complete the sale to your brother and transfer the funds to your account (the solicitor will do this), then look to buy your onward property with your half as a deposit. Assuming you want to buy your property with your partner, you will also probably want to be tenants in common with unequal shares to protect your inheritance should you break up.

Your brother will be able to get a mortgage offer within a few weeks. It might take a few months depending on the paperwork the solicitors will need to go through to complete the sale. You can get all the paperwork ready now, so your mum’s death certificate, deeds and just send those over as soon as you have a solicitor. Ask on a local FB page for a good conveyancer/solicitor specialising in property sales/purchasing.

Spring is usually a good time for the housing market (usually, who knows what will happen next year). If you start the process now, you could start looking in the New Year. You might not have completed the sale to your brother by then but your mortgage in principle will be able to take into account the funds being transferred shortly.

@CremeBrunette yes he can afford old valuation and more just incase, but I doubt it would have gone up much, will confirm with new valuation.

He can afford it on his own without partner and they've not long got to together so I think he'll do it on his own then sort it out in the future. In my case, Il be buying a new property with my partner (not married) I hadn't heard of tenants in common till now. Beforehand, I was researching deed of trust to protect my inheritance, il do some research on that.

It's been ongoing for a while me wanting my share, but I've put my foot down and said I need it next year as I'm fed up renting now especially as he quite literally sitting on my chance to buy. So new year/spring time sounds perfect.

Thank you for helpful advice

Sorry, yes, that's a good plan.

Has he been paying you any rent in the last 2 years. You are entitled to 50% of whatever the market rent for the property would be.

You are assuming he can buy you out or wants to buy you out - alternatively he can just stay there!, you would have to apply to the court for an order for sale, which is long winded, costly and no guarantee you will get your way.

Unfortunately i've seen this happen a few times, one wants to sell, the other doesn't, it's ones residence. In the case of a neighbour the court refused her brothers attempt to force the sale of her half, saying she could remain, which effectively devalued his half to nil.

Hopefully you brother is a good guy and doesn't meet a clever solicitor.

Don’t wait around, get it valued now, and get it on the market. Houses take ages to sell.

If he’s not paying you rent for your half start now!

@CheeseCakeSunflowers only just started now but as said previously it's a very long story 🙈

@PropertyManager I'm not assuming, I know. We've had the discussion and all is going forward in the new year.

@Namenamchange I will get it valued in a few weeks but in regards to getting it on the market, that won't be necessary as brother wants to buy me out as mentioned.

He started a few weeks ago, long story as to why it's not long started but just happy to have something in place now.

The solicitor will be able to advise you on the best way to mortgage the property to protect your inheritance, both for if you break up and if you were to die.

Be aware that you may have a capital gains tax liability on your sale of your half to your brother.
This will be based on the market value at the point of sale (as you and your brother are connected parties - hopefully he will be paying you market value so that won't be an issue), less your costs of sale, less your share of the probate value (ie your base cost) when you inherited it.
This applies as you haven't been living there so you can't claim principal private residence (PPR) relief.

CGT on UK residential properties has to be paid within 60 days.

Plus the annual CGT exempt amount which is currently £6k (2023/24) will be falling to £3k from 6 April 2024 (2024/25).
As you appear to be expecting an increase in value amd therefore a gain, getting the transaction sorted before 6 April and having the higher exempt amount would be better for you.

Has he been paying you any rent on your half?

He was at school?

But saying that it is a big leap from being at school 2 years ago to now earning the £30k odd needed to get a mortgage of that amount.

Well, how was he paying the bills?

@SecondUsername4me I don't quite understand why it's being questioned when it isn't the sole purpose of this post, nor does it require the back story of it to get the advice needed. Before he got a job, he got help with universal credits whilst at school in order to pay bills, and our grandparents helped us where they could. Bills were very minimal as I said mortgage free.

@Dogwithagammyleg is right part of the reason was he was at school. He doesn't earn that amount but we also inherited money as well as the house and has been saving from having full time job and little bills to pay. So has a very good deposit, just not full amount of what's needed to buy me out.