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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:
FamilyPhoto · 31/08/2024 14:18

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!

🙄 Really ?

Tillygan60 · 31/08/2024 14:26

Definitely sell!
Renting out property takes time and money, plus the tax implications and the stress involved can be unexpectedly onerous for a novice landlord.

Far better to sell now and invest for their futures.

DadJoke · 31/08/2024 14:28

Have one of them live there to make it their primary residence, then sell it.

Hohofortherobbers · 31/08/2024 14:33

Air bnb it? Then they can use it themselves from time to time.

edwinbear · 31/08/2024 14:34

I’d be selling it as quickly as possible, ideally before Rachel Reeves announces the budget on 30th October and makes rumoured changes to CGT.

Silvers11 · 31/08/2024 14:58

@EnergyEmoji I'm very sorry for your loss.

With regards to what your DC's best course of action should be - they should have plenty of time to think about this and to Take Experienced professional Advice from those who will understand all the ins and out between each of the options

It is my very strong advice that your DC see a solicitor /tax expert/financial adviser about the right way for your DC to proceed which will disadvantage them the least. Capital Gains Tax will have a different impact on your DC depending what option they choose to go with. Also for reasons I have said below, it might be several months before the house can even be put up for sale if that's what they decide they want to do. Tax laws especially around property are quite complex IMO. Inheritance Tax is more straightforward but still needs navigating . Is a solicitor the Executor or is it you or another family member?

The Executor will not be 'personally' held responsible for debts of the Estate but they need to follow procedures to ensure they are aware as far as is possible, of all the debt outstanding. In Scotland that is considered to be at least 6 months after the date of death. Not sure what the advice is in other UK jurisdictions

Plus, you probably know all this, but just in case you don't, I just want to mention the following:

a) If probate is required - which it almost certainly will be, (but the rules vary depending where you live in the UK) the Executor cannot distribute anything to anyone named as a beneficiary in it, until all debts have been paid. Probate could take a while.
b) Once probate has been granted ( or you're told it isn't needed), the Executor needs to ensure that any debts are 'gathered' in as a first step. Also any outstanding 'income' streams have been received into the Person's Estate have also been received. There may, for example, be refunds due on Council Tax, TV Licence, Pension payments, Income tax - anything at all.
c) Then the Executor has to settle all the debts before distributing whatever is left. They will need to think of things like Inheritance tax ( doesn't sound like it will be payable from what you have said, although who knows what may happen in the budget). Capital Gains Tax may also need to be considered - that will depend on what is decided to do about the property concerned
d) It may be that the house may need to be sold to pay all the debts associated with the Estate in any case ( or the DC agree to pay off the remaining debts , but keep the house) before the assets are then distributed

Hard to deal with when you are grieving, but your DC do have time to consider their options

GingerSpots · 31/08/2024 15:07

edwinbear · 31/08/2024 14:34

I’d be selling it as quickly as possible, ideally before Rachel Reeves announces the budget on 30th October and makes rumoured changes to CGT.

You clearly have no idea about the timescales or legalities involved in either probate or conveyancing.

SensibleSigma · 31/08/2024 15:12

@Tulip8 bad taste or no, OP is presumably the executor so has responsibility for the flat in question. Already.

She has to be ready to make decisions on a property she’s already responsible for. It could flood tomorrow and she’d need to deal with that.

Spiderwmn · 31/08/2024 15:26

Don’t hand it to someone to sell, as you don’t want the hassle, check it over first in case of fixable mould,damp patches,leaking windows which would reduce buyers offers- but could be easily sorted.

Pluvia · 31/08/2024 15:30

Since I posted it's become clear that this is a £100,000 flat. By the time it's been sold and estate agents and solicitors paid, the DC will have perhaps £95k to share between them — there seem to be at least two of them, possibly more. So we're talking less than £50k each if there are two of them. Which is a great sum to come into but not enough to be of interest to an IFA, for example. Paying for independent legal advice and professional investment advice is expensive and not really worth it on these kinds of sums.You could quite easily end up with £2-5k of charges and nothing much to show for them.

@Silvers11 the likelihood of incurring CGT seems vanishingly low on this level of estate. It would only be charged if the property was valued at £100k on the death of the deceased but was later sold for more — and if the estate is going to sell it, the estate will have to pay. Whoever's doing probate should ask the estate agent to give an optimistic valuation and then expect to sell for that value or lower.

It seems very odd to be focusing on obtaining a few quid for a TV licence refund while also suggesting that OP/ her children spend potentially £thousands on advice they may not need...

Silvers11 · 31/08/2024 15:43

@Pluvia It will be some time before the house can be sold. So it's value Could well have gone up by the time it is sold. Lots to think about when it comes to CGT. Up to them whether to see a FA/solicitor for advice on the pros and cons, but I don't know enough about all the background circumstances to give the OP legal advice and I know from personal experience it MAY be complicated.

Neither was I concentrating on small sums per se. Those kind of sums mounted up to around £2k after my Mother died which totally surprised me

GingerPirate · 31/08/2024 16:03

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!

Well... life is "fast", nowadays.
The deceased won't mind.
😁

aramox1 · 31/08/2024 16:05

You/ they could feed 4k of the proceeds annually into a lifetime isa, each, if they're sure they want to use it to buy. The gov adds 1k a year.

Twiglets1 · 31/08/2024 16:06

aramox1 · 31/08/2024 16:05

You/ they could feed 4k of the proceeds annually into a lifetime isa, each, if they're sure they want to use it to buy. The gov adds 1k a year.

But LISAs are only for First time buyers so I’m not sure they would still qualify now they legally own a property between them.

CrotchetyQuaver · 31/08/2024 16:14

Sorry to be the party pooper here but many of those ex council high rise flats are unmortgageable, limits its value and the available market as cash buyers only. See what you can find out and manage their expectations accordingly

Midgetwithaplan · 31/08/2024 16:17

Sell and let the money go into the estate for distribution to them. It screws up first time buyer opportunities if you inherit a property and can cost you a lot in the future

GingerSpots · 31/08/2024 16:20

The OP has already said the flat is very much at the lower end of the local market. It's in a high rise 60s tower block and worth £100,000. While it might have lovely views and spacious rooms it is by its very nature not unique and I would expect the market for flats of this kind to be pretty static. The likelihood of it increasing in value between the date of death and sale such that CGT liability become significant is so small as to not be worth worrying about.

I agree with a PP the OP and her DCs don't need expensive financial or investment advice. Any decent probate solicitor will be able to advise sensibly on basic tax matters and how to vary the will/make a sale in the most beneficial and efficient manner.

Pluvia · 31/08/2024 16:28

GingerSpots · 31/08/2024 16:20

The OP has already said the flat is very much at the lower end of the local market. It's in a high rise 60s tower block and worth £100,000. While it might have lovely views and spacious rooms it is by its very nature not unique and I would expect the market for flats of this kind to be pretty static. The likelihood of it increasing in value between the date of death and sale such that CGT liability become significant is so small as to not be worth worrying about.

I agree with a PP the OP and her DCs don't need expensive financial or investment advice. Any decent probate solicitor will be able to advise sensibly on basic tax matters and how to vary the will/make a sale in the most beneficial and efficient manner.

Edited

This: use a probate solicitor who will know what to do. Probably a deed of variation to protect the ftb status of the children.

ManchesterLu · 31/08/2024 16:29

I'd sell it. It would be a really good amount of money to get at their stage of life.

MtClair · 31/08/2024 16:45

Probably a deed of variation to protect the ftb status of the children.

I think that a really important point.
The second one imo is to look at how the money will be used if the flat is sold.£50k isn’t actually that much and there will be a huge temptation to use that money for ‘fun’. It has the potential to disappear pretty quickly….

Cerialkiller · 31/08/2024 16:46

I also suggest selling but for an additional reason. Sharing and renting out a property in shared ownership is always a pain. My mother and aunt inherited my grandmothers property and rent it out. It's In the same city my mother lives in and inevitably she is the one who has to do more of the leg work as she is also retired and is the more proactive if the two. It's very easy to be resentful in this situation as the rent is naturally split 50/50 dispite one sibling doing more work. Doesn't stop aunt making a fuss about decisions though, e.g. updating the bathroom or replacing the boiler.

If the flat is as low value as you are suggesting then the rent will not be high enough to be worth the risk and hassle. My mum makes £650 a month on half the rent after agent fees (typically 10-15%) so it's worth the grief that comes with it and the income is enough to maintain the property on top of generating some income but she would have considered selling if it was much less.

JoyousPinkPeer · 31/08/2024 17:16

Sell.

Rental - no. The government are likely to bring in more regulations to protect tenants. Take you two years (at least) to get them out and they can trash it and not pay you meanwhile.

Keep to use occasionally - no. Will cost a lot of money or little return.

63isMe · 31/08/2024 17:17

Sell! This government will hammer landlords.

BirthdayRainbow · 31/08/2024 17:22

They should seek independent advice from you.

A few grand for holidays and splurges is ridiculous. £50k won't last long if that's the mindset.

GingerSpots · 31/08/2024 17:53

That's clearly not the OP's mindset. Her DCs already have LISAs and ISAs. Even as much as £5k to spend 'now' on travel/sport/hobbies/interests rather than invest for 'later' is only 10% of the expected 50k.

It it were me I'd love to think of my generous relative when riding my new bike/away on a mini break/learning to surf/wearing a fabulous new dress I couldn't otherwise afford for that special occasion. And still have enough invested to give me a decent lump sum and some options in a few years time.