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Original poster

DC have inherited a flat! Sell or keep?

131 replies

EnergyEmoji · 31/08/2024 10:12

A fabulous problem to have I know, but my two DC have unexpectedly inherited from a relative.

The property is a high rise flat in 60's style block on the edge of a busy city near very good transport links. It's an area they know well as it's not far from the family home. It has decent sized rooms and lovely views.

Dc are late teens/early twenties and just starting out in life. Both live away from home and have no plans to return.

There are three options:-

First is to keep it and rent it out so they can get some income from it. Neither have a property of their own. This is my least favourite option as I know I'll end up doing the practical stuff like getting a call at 3am from tenants to say the boiler is broken! We have no experience of letting, but I'm sure with all the rules and regulations it would be a nightmare.

Option two is to keep it and use it as a base for storing furniture and to use themselves when they come home for Christmas, etc. This has some appeal, but they'd have to think about paying service charges, council tax, etc.

Option three is to sell it.

It's very much their decision, but I would like your thoughts please as they're due here in a couple of days for the funeral (which I'm organising) and they want to discuss it.

OP posts:
Andwegoroundagain · 31/08/2024 11:17

CraftyNavySeal · 31/08/2024 10:38

Would they though?

If the executors sell the property once probate is granted and then give DC the cash the flat would never have been put in their names.

Show quote history

This! Best to sell before the property is transferred and then they arr still ftb with a decent deposit

Dotto · 31/08/2024 11:22

Yep, the executor should sell as the personal representative of the deceased, and then distribute the funds equally to them. Putting the title into the names of the beneficiaries first will just be a waste of time and money.

Fortesque · 31/08/2024 11:22

This reply has been deleted

This has been deleted by MNHQ for breaking our Talk Guidelines.

RemakeRemarke · 31/08/2024 11:26

The person living in the flat may have had lots of money help via benefits and reduced charges.

I also think sell and Invest but make sure they understand investing and put some into a sipp, premium bonds (only as it's tax free) and isa, cash and stocks and shares.

Pluvia · 31/08/2024 11:44

Sell, sell, sell, and get the executor to sell it so that the children remain first-time buyers — otherwise if they've been property owners (however briefly) they may be locked out of any ftb offers.

Pros of renting:
A bit of rent (divided by 2 or more from the sounds of it) coming in most months, but not during voids when you have difficulty finding a tenant or you're supervising refurbishment
Potential increase in value — though in a lot of places the price of property has dropped back

Cons of renting:
Endless, and may never happen, but you will likely worry about...
The 2am telephone call when you're away on holiday to inform you that a water pipe has started leaking/ the boiler's broken/ the loo's blocked.
The tenant who doesn't pay rent and vanishes overnight leaving the flat trashed.
Service charges and ground rent — even when the place is empty.
18% management fees if you want someone else to manage the place for you, plus super-high charges for the plumbers, gas engineers, decorators etc they get in to fix stuff (because the management agency often takes a quiet backhander from the contractors it uses). So 18% plus higher bills.
Likelihood of high maintenance bills in the near future: a 60s block is coming to the kind of time when all sorts of major work might be required and you'll be expected to contribute your share if you're an owner. Years ago I had a colleague who bought an ex LA flat in a tower block (London) in which half the residents were renting from the LA/HA and half were privately owned. When the block needed major structural work the private owners were handed bills of £18k per flat. I can remember her distress and disbelief.
Does it reach a D on its EPC? If E or lower you can't legally rent it out. In six years time you'll need a C to rent it out and there will be thousands of draughty, cold flats on the market.
When your DC do decide to sell they'll pay Capital Gains Tax on any increase over £3k.

And in the future Labour are planning to change legislation to favour tenants and not landlords. So when the time comes for your DC to sell they may not be able to get the tenant out and may have to sell with them in situ, which will reduce the value of the property. There is also rumour of cutting tenants who don't pay their rent more slack. I'm aware of someone in my social circle who struggled to evict a tenant who hadn't paid rent for more than a year and who left the flat in a dreadful condition.

Sell the flat. Invest £20k pa per child in an ISA, give them each enough money to go travelling for three months, get an independent financial advisor (a truly independent one) to advise on the best way to invest the rest so that they pay as little tax as possible. Be aware that any extra income may affect student loan repayments etc.

Dotto · 31/08/2024 11:53

Sell the flat. Invest £20k pa per child in an ISA, give them each enough money to go travelling for three months, get an independent financial advisor (a truly independent one) to advise on the best way to invest the rest so that they pay as little tax as possible. Be aware that any extra income may affect student loan repayments etc

It would be 100% up to the young adults how they spend their own inheritance

Glittertwins · 31/08/2024 11:57

I'd be selling it and investing the proceeds into individual accounts. It might take a while being a high rise so better to do it now whilst there is no urgent need for the money for either DC.
If it was rented out that comes with the issues that PPS have already mentioned.

Twiglets1 · 31/08/2024 12:02

I would be suggesting they sell it and so can split the proceeds between them equally and cleanly before it gets messy. They can put the money in a high interest account for a deposit in the future to buy their own properties or however they want to spend it.

terracottafarm · 31/08/2024 12:07

Sell and invest the money OP. You can make a ton investing it especially if the DC won't need the money in the next 5-10 years

Bickybics · 31/08/2024 12:10

I’d also sell. DH and sibling inherited his parents place in an area very good for renting. However…
It wasn’t in a fit state to rent and would have needed lots of work/money to make it rentable. We also live elsewhere if there were issues/do work.
We didn’t want to be financially tied to sibling who has a long history of bad money management.
DH also did want to leave it empty so we could use it when we needed, but I knew it would end up full of damp that way.

Sell it now and put the money away.

Whatifthis · 31/08/2024 12:13

Sell and support them to invest and/or save the proceeds. If it's jointly inherited there are all sorts of entangled issues that may arise in future if one wants to keep renting it or using it and the other doesn't. Don't create a future issue or potential falling out, if they had received a lump sum of cash they wouldn't be investing it in a property to rent out so treat this in the same way.

Original poster
EnergyEmoji · 31/08/2024 12:20

Oh thank you to all who have taken the time to reply. A lot of details too. Just what we need to help with decision making.

The main consensus is to sell and I agree this is their best option. They already both have (rather meagre) LISA's and ISA's so I think a few grand each for holidays and splurges and the rest to save. They are fairly sensible.

We haven't had time to go through all the fine detail yet about charges, etc so can't comment on those. The relative wasn't wealthy though and a 5 minute search tells me the property is worth around £100,000. It's very much at the lowest end of the property market for this area, so should be good for a sale to a first time buyer or pensioner?

Thank you all again for all the information. The Dc are adults, but still look to me for advice and I want to do what's best for them. This will be an amazing leg up for them on the property market in due course. Neither is anywhere near that stage yet though.

OP posts:
Isitovernow123 · 31/08/2024 12:32

Do not put the property in the kids name - leave it and sell in deceased name. They’ll lose all the FTB benefits otherwise.

PollyPeachum · 31/08/2024 12:47

You are getting a variety of ideas here. Here are mine.
Go to two local agents that deal with properties like yours.
Having been an amateur landlord I will only let with an agent. Chief advantage is they are able to do more checks on references. In 20 years we have never had a default.
You may be advised to Let it now but sell when market is better. 'Impossible' to get insurance on empty property.
If they want to buy their own homes and they part own this flat they will be charged the High Rate of Stamp Duty. When they sell in say 2 years CGT will not be high.
Talk to professionals before a real decision is made. Get them there to hear for themselves. Do not be their interpreter.Agents work on Saturdays.

harriethoyle · 31/08/2024 13:17

Another vote for sell - I moved towns and kept house in old town, rented out, and rented in new in case new town didn’t work out. It was a HASSLE and I got mates rates on agency fees from bro who was an estate agent. Sell and invest.

Longma · 31/08/2024 13:20

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PollyPeachum · 31/08/2024 13:23

I would not advise anyone to buy as an investment in order to let it out. But this one is fully paid for already in their names. If the owners chose to sell and invest how will they decide on what to buy in their ISAs?

notanarchaeologist · 31/08/2024 13:24

FumingTRex · 31/08/2024 10:21

I would rent it out through an agent who offers full management. Plan to sell it when one or both are ready to buy. If its a flat you shouldnt have major maintebance costs as you are just leaseholder, but you need to check the service charge and what you are responsible for. Using it for storage is a crazy idea, your insurance would be sky high for a vacant property.

Plenty of my friends have done this and I wish I'd had the foresight to be do the same.

mitogoshi · 31/08/2024 13:29

I would definitely consider renting for a year or two because probate takes ages to start with. They have lost their first time buyer status anyway, but they will probably want to sell before buying individually due to tax implications. Remember they'll need to pay capital gains when selling so a proper valuation when deeds transfer is a good idea

circular1985 · 31/08/2024 13:37

Do not put the property in the kids name - leave it and sell in deceased name. They’ll lose all the FTB benefits otherwise.

^this

Womanofcustard · 31/08/2024 13:44

Sell or rent it out through a management company. First thing would be to investigate what amount of rent they would receive after all the expenses. Then find out the approximate selling price (after agency fees). Then decide.

aramox1 · 31/08/2024 13:45

Do check how much harder renting out is now.Check with a solicitor if the inheritance itself means they've lost FTB status. They may want the security of a property despite all the inconvenience. And if they decide to sell, urge them to invest the money not leave it in savings- explain how inflation undercuts the value. They may want you to manage it all, or they may disagree... tricky.

CelestialNexus · 31/08/2024 13:47

Tulip8 · 31/08/2024 10:15

Very poor taste to be discussing an inheritance before even the funeral has taken place! It's not even theirs yet!

There's no harm in planning

JanefromLondon1 · 31/08/2024 14:05

You can have it sold and never be on their names so they won't lose the benefit of being a FB. DD did this with an inheritance, it was done through the solicitor.

samarrange · 31/08/2024 14:14

Sell it.

Let's say it's worth £200k. If by some chance they want to own £200k of property, would they buy this specific flat? Almost certainly not. They could buy literally any other £200k property with the money (give or take fees).

Also this way they can both have £100k independently. No matter how close they are they will have different ideas what to do with the money. Having the price of half a flat in the bank should be enough to ensure that they are debt-free for their 20s, which is brilliant.

The challenge is to not fritter the money away. Maybe put £5k in a "Thanks, gran" fund to spend on a holiday, 70% in an index tracker fund, and the rest on deposit.