For many, inheriting a property is something of a dream, but it can be a stressful process depending on the circumstances in which it’s inherited. Further stress comes from the knowledge that the property is seen as an ‘investment’ – and therefore you want to make sure you make the right decision.
Try not to let the stress overwhelm you. Once you own the property you have several options available to you.
Some people decide to sell or move into the property.However, in both of these instances it’s important to consider the factors which could impact your decision. For example if you are looking to sell the property, make sure that you understand the property market in the area where you are looking to sell. If you feel you’re not going to get a fair price for the house in the current climate, then you need to look at other possibilities, such as those below.
Rent It Out
Increasingly, we’re seeing people take the option of renting out inherited properties. In fact, it’s so common this kind of landlord has been given a name – the ‘accidental landlord’. This name comes from the fact their decision is due to their circumstances, rather than by design.
Renting out an inherited property, either in the long term or until a point in time where selling the property is more feasible, allows you to make a return on that ‘investment’.
The Benefits of Renting
Renting out the property means that you will have a steady monthly income which could cover the cost of the any mortgage you might have needed to take out when inheriting the property or, if unencumbered, provides a new and sustainable source of income which can either supplement your existing money or open up more private rental possibilities for you in the long term.
Things to Watch Out For
However, there are hurdles that often catch accidental landlords out, so it’s important that you’re aware.
The first is the mortgage. If you needed to take out a mortgage on the property you inherited, the obvious choice would be a buy to let mortgage. However, if you took out a residential mortgage, you need to ensure that you inform your lender of your intent to rent the property. If you don’t do this, you could be in breach of the terms of your mortgage and risk the property being repossessed.
The second is insurance. Normal home-owner’s insurance won’t cover a rental property for all the things you might need. That’s why you need specialised landlord’s insurance from someone like Total Landlord Insurance.
Finally, there’s deposit protection. When tenants move in and you take a deposit, you are required by law to protect it with a government authorised scheme. Don’t worry –we can help you with that!
Want to Know More?
If you have inherited a property and are thinking about renting it out, or are already what is called an ‘accidental landlord’ and want some guidance, then we have a selection of guides, documents and helpful advice available from the Guidance section of our website.