Inherited Property

[Kitcat200]

Myself & my 2 sisters have inherited our mums house after she passed away last year. One sister wants her monetary share of the house. It was valued at probate at £120,000 and myself & my other sister said we would give her £20,000 each in November. However, it has come to light that electric work & some other things would need done should we actually sell the house on the open market. Plus the fact that a near identical house has just been sold for £90,000 as there were various things needing done to it. Our house is same age so quite possibly we might be in the same boat as the other house. Is it unfair of myself & my other sister to ask to take1/3 of the cash for any repairs out of her £40,000? She had got a copy of this other houses home report but never told us, so she knew the work needing to be done on it.

You need to get the house properly valued and then decide how to deal with it.

I assume you and your other sister don't want to sell? If not, I would ignore the cost of repairs and get a valuation for what it's worth if sold as is. You can then give her a third of that amount. Alternatively, if she is insisting on the repaired valuation, you can suggest you get the repairs done, with the cost split between the 3 of you, and then get it valued and use that valuation

What are you and your sister wanting to do with the property?

We would like to keep it for a holiday home or perhaps rent it out to pay for itself.

As you want to keep it, you need a full survey and valuation done based on its current state. You would then pay your sister one third of that value. The cost of the survey and valuation should be split between the 3 of you.

It's then up to you and your other sister to agree exactly what repairs and renovations or improvements you want to make.

3 valuations and take the average. Deduct any fees that would be due if you sold it on the open market and them use that figure

Is it unfair of myself & my other sister to ask to take1/3 of the cash for any repairs out of her £40,000?

Yes it is unfair, that's not the right way to go about it, she doesn't want the house. You need to get a valuation (or even better average of 3) and use that figure, it shouldn't be any more complicated than that.

The trouble with estate agent valuations alone is that they don't have the benefit of surveyors report. If the house was being sold to a 3rd party, the price could well be renegotiated following results of the survey. I think the same should apply here. The OP and dis 1 are effectively buyers.

Also when I had a late parent’s flat valued for IHT even though we told all the agents to be conservative in their valuations (as the market was crashing at the time) we still got wildly differing valuations, some differing by £100k. It end up selling at the absolute bottom of the market, well below even the lowest valuation. Estate agents always overprice.

Looking into this from a different perspective- you appear to become what they call accidental landlords.

Have you considered the work involved for it to become a rental/holiday home… not only just getting the property into a renovated condition but also ensuring that the property meets certain legislations.

A holiday home will require someone to manage it (accepting bookings/guest enquiries/maintenance/changeovers) - if you have full time jobs - who is going to manage this? You’ll need to employ someone to do this…

A rental would be more straightforward as you can let it out to tenants privately or through an EA…
If you get good tenants then you have nothing to worry about and you can just let the money roll in each month. Just make sure you vet your tenants first! Having nightmare tenants are the worst - I have been there!

Yes it needs to be a rics survey including valuation. Not agents estimates.

More to the point if you are going to let it out you will need an electric and gas safety check which may from what you have said throw up issues

Totally unrelated but if no one says anything then no one learns anything. It's 'my sisters and I' Not 'myself and ....'

This is messy and could lead to bad feeling between family members.

I wouldn’t risk it personally. It would be a lot simpler just to sell the property on the open market then all sisters know they are receiving a fair & equal share.

Before you even think about letting it as a holiday home check the new regs due to come in. There are stringent fire safety measures that must be implemented, furnished holiday let allowances are due to be abolished and statutory regulation is on the horizon.

In some areas you may ending up paying double council tax. If you want to go onto business rates that has extra requirements on the number of days the property is available to let and the number of days it actually lets. I work in the industry and a lot of people are stopping as it's a lot of work.