Selling inherited house

[Cancermummy]

I'm looking for some advice and can't seem to find anything on this situation.

Me and my sister inherited our grandparents shared ownership house 4 years ago. We both got 25%. My sister was still living at our parents with no interest in moving out and no job (so wouldn't have been able to afford rent payments). It was agreed I would live there and when I eventually sold it she would get what it was evaluated at in the will.

The time has come for me to look at selling the place. My sister is still living at our parents with no job so is unable be able to take over the place. We have put a lot of improvements into the house over the years including a fully functioning garden office. My sister now wants 50% of what we sell for despite originally agreeing to only have 50% of its value at the time of our inheritance.

Does anyone have an idea on what a reasonable amount would be for her to get? Or any idea where we stand legally? To give an idea on price our 25% of the house was originally worth £32,500. I'm not sure what its worth now.

Any help or pointing in the right direction would be appreciated. Thank you.

I’d say 25% of its current value. I know you said you’ve made (and presumably financed) improvements but I also assume you’ve not paid her rent on her share. I suppose her “rent” may cancel out against the rent/service charge on the portion you collectively don’t own but have probably paid without her contributing. Just guessing.

If selling, you really should know what it’s worth.

My take is that if you couldn’t have afforded to buy her out at the time of moving in, she gets a share of any profit. It was your choice to add further improvements plus you’ve had the benefit of living with those improvements.

She could have invested the 25% had you given her it at the time. It feels unfair her share has effectively depreciated and you got to live there for free without paying any rent on her part or her renting it out. Feels like you are actually ripping your sister off. Money you spent on improving the place could be seen as covering the rent she could have been getting had she chosen to rent out her share and she would have then still got the value of it now.

What is reasonable may not be what is legal though.
Unless your sister agreed to something different in writing and it was all legally noted that she would take less then she will probably be entitled to whatever the will said

You take the cost of the improvements from the amount you sell the house for then split equally with your dsis.

Did you pay rent to your sister?

If not, you should recompense her for that as she has not had the benefit of her inheritance which she could have invested

Have you considered CGT?
If the will stated that you each receive 25% of the property (assuming the remaining 50% is the shared ownership element) then your DS is entitled to 25% of the equity. You have benefitted from living in the property, she has had no benefit from it. She could have had the 25% in cash, put it in a high interest account and made a pretty penny in interest.
As you have lived in it, you wouldnt be subject to CGT, as she hasn’t, she will. You will not have first time buyer status so if yore buying another property you’ll have more fees in stamp duty. She will be a FTB so were she to buy a property, she wont have higher stamp duty to pay.

I'd have thought 25% of what it's vs worth now. I'd ignore the improvements as you've still benefitted from her share unless you've been paying her rent. The fact she lives at home is irrelevant.

I'd ignorec The cost of the improvements as you've been benefiting from them while you live there.

How old was your sister when she agreed to the original split. It's a really odd thing to have agreed? Might she not have understood or might she have felt pressurised?

25% as agreed at the time of inheritance plus 50% of the difference in value, minus the money you spent on improvements.

So people aare right that I've not paid rent to my sister but I have paid rent on the 50% we don't own as well as all the other bills associated with a house.

My sister could not have kept the house without us as she had no money for any bills. You can't rent out a shared ownership house but even if you could she would have had no money to pay for repairs or upkeep.

If I hadn't moved in the house would of had to have been sold as soon as we inherited it. I can understand her getting a bit more then the original price but not 50% of the price now surely.

Yes but what is the legal position? Thats what you need to find out

Surely, legally, unless you have a contract from when you moved in stating otherwise, your sister owns 25%? I would calculate what you have paid to cover her rent over the time you have lived there and deduct that from the current value (minus the office) as you would be expected to maintain the property whilst living there.

I think you are being extremely cheeky.

You didn't pay her rent.

EXACTLY this!

She gets 25% of the value now.

Now be stingy about it. It doesn’t matter what her finances are like and whether she could have lived there or not. She owns 25%. It was your choice to upgrade and add the office.

Even paying the 50% rent share you have still been in a much better financial position that you would have been without the house. Sell it, and give your sister 25%

And her sister didn't maintain it, improve it, or pay rent on it either - but OP had to pay rent on the 50% they don't own.

She is entitled to 50% of the selling price minus 50% of the rent you've paid. If you have also paid ground rent or service charges she owes you for them.

How am I cheeky? I didn't pay her rent but she's not paid anything for the property either. That was kind of the point. She knew she couldn't afford to pay rent on it so I said I would pay all the bills but wouldn't pay her.

Legally if I stopped paying the rent they could go after her for it but I'm sure no one thinks that's fair. Obviously I wouldn't do that but whats legal and whats fair are two different things.

Why shouldn’t she get 25% of what it’s worth now? (Maybe minus your expansion the garden office)

You chose to live in it, and have benefitted from living in her share rent free.

So what if you paid the rent on non opened but, you were living there! Ditto the bills.

She could have made good interest had you sold when you first both inherited.

You had the benefit of living in it and it had increased in value.

Why shouldn’t she get the benefit of increase in value on HER share of the house?

TBH you sound so unreasonable that I wonder if this is a reverse.

@Cancermummy
I think the first step is to get the property valued so that you can see if it's now worth any more than when you both inherited.
Also consider the money spent on upgrades, maintenance and insurance.
It's probably wise to talk to a solicitor about the legal position and if any CGT is due (probably not as the property value is low).

Based on what you've said about the original vale of the house the difference between the two values might not be that big. I would get it valued before you worry about this too much.

Did you have it valued when the grandparents died?
She's got a 25% stake in the property same as you assuming you didn't buy her out.
50% of the total property value between you.
Depending on how it's sold and IF your property improvements have significantly increased its value over and above what it was worth when you moved in.
Ideally there'll be enough increase in value when it's sold that you can cover the cost of everything you've spent plus a bit more and she gets her 25% plus a bit more than the value when you both inherited it too. But that might not be the case. Shared ownership properties aren't quite like the standard property market. Forget about the rent aspect of it

Your sister owns 25% of the property. You can't 'freeze' the value of that share to the time of inheritance because it suits you to avail of the increase in property value but not her!

Think you need legal advice tbh.

Why did you not sell it immediately on inheritance?

If you are both on the deeds as owning 25% that's what you get.

It would have had to have been valued when OP's grandparents died for Probate.