Selling an Inherited Property?

The process for selling an inherited property involves some additional formalities to ensure all beneficiaries in the will (and HMRC) receive their full share of the asset. The sale needs to be seen as fair and transparent – that’s why an auction sale is very popular for inherited properties.

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Home: Auction Link » Guide to Selling Inherited Property

This guide is intended to provide executors with an overview of the process for selling an inherited property, it deals specifically with the sale of inherited properties in England and Wales. The information and examples provided are intended to help executors complete their duties as quickly and efficiently as possible.
Last updated by Mark Grantham on 28th November 2017

What is an executor? An executor is a person appointed in the will of a deceased person to carry out the terms of their will. Most wills appoint two executors (joint executors). An executrix is the female term, sometimes the gender-neutral term “personal representative” is used in place of either executor or executrix.
Grieving the loss of a loved one is difficult enough without the responsibilities of being an executor, yet it’s very often the closest friends and relatives of the deceased who are allocated that responsibility.

The job of an executor includes various duties, staring with locating and understanding the will and finishing with distributing the assets of the estate. And whilst the role can seem quite overwhelming to begin with, when it’s broken down into separate parts it becomes much easier to deal with. It can be a good idea to pass some responsibilities to a solicitor, particularly where complex wills are concerned. However, it’s important to retain control over other important aspects, particular the sale of any high value assets, as this guide explains.

Quick Help
Our comprehensive guide to selling inherited property will give you all the information you need to navigate the probate property sale process. But if you have specific questions you might find the quick links below an easier way to find the answers you need.

What’s the timescale for selling an inherited property?

There’s nothing to stop an executor from signing up to the services of an estate agent within just a few days of the property owner’s death. And if the property is priced fairly a buyer might be found within a matter of weeks – as a chain free sale the transaction could be completed straightaway, if it wasn’t for one thing. Probate!

The delaying factor when selling an inherited property isn’t the sales and marketing side of things, but the time taken to sort out the estate (assets and belongings) of the deceased in accordance with their will. That process is known as probate.

If the will is straightforward (or if there is no will, so long as the beneficiaries of the estate are obvious i.e. spouse or children) the timescale for obtaining grant of probate can be as soon as one or two months.

If there are no complications with the will or the property, then an inherited property can be sold within as little as two months and the proceeds of sale distributed to the beneficiaries upon completion of the sale.

Complicating factors for obtaining grant of probate (e.g. family disputes, difficulty finding paperwork, complex estates/tax affairs or lazy solicitors) will cause obvious delays. It’s not unusual to see probate take the best part of a year. And without probate, it’s not possible to exchange contracts on the sale of an inherited property.

Can an inherited property be sold before probate is granted?

In a word, no! A property cannot be legally sold before probate is granted. However, it is possible to instruct an estate agent to advertise a property for sale before receiving probate. It’s quite common for inherited properties to be put on the market with an estate agent soon after the death of the owner and for the contracts of sale to be ready for exchange by the time grant of probate is received.

When selling an inherited property at auction it’s best to make sure you’ve received the grant of probate before advertising the property. Even if you’re certain the grant will arrive before auction day (when contacts of sale are exchanged) if you’ve forgotten to tick one box in your application for probate, or if there is a query from the probate registry office then the grant could be delayed for a month or two. So rather than incur the expense and wasted time of an aborted auction sale, it’s safer to wait for grant of probate to be received.

What is probate? Probate is the process of proving a deceased person’s will is valid and giving authority for the assets in the estate to be sold or distributed to the beneficiaries. Note that the terms “grant of probate” and “grant of representation” are effectively used to describe the same thing.

What’s involved in applying for probate?

The grant of probate is like a certificate, with an official stamp from the probate court. Without the grant of probate all assets in the deceased persons estate are effectively frozen, so probate is a bit like the key to unlocking the assets.

To apply for the grant of probate the executors will need to: (1) complete two forms (the probate application form called a PA1 and the Inheritance Tax form), (2) provide an official copy of the death certificate (3) the original will along with 3 copies and (4) the application fee of £215.

The forms to apply for probate are available on the government website.

The documents need to be sent to your local Probate Registry. Soon after receiving the forms the probate office will send an oath and details of how to arrange a face-to-face appointment. There are two ways to swear the oath, either (1) at the local probate office, or (2) at an office of a commissioner for oaths (usually a solicitor).

As long as everything is in order executors can expect to receive the grant of probate within 10 working days of swearing the oath.

How should an executor value a property for inheritance tax purposes?

The idiom of “nothing being said for certain, except death and taxes” is certainly accurate when it comes to probate.

A key part of probate is calculating the amount of tax due to the government, as such the executor will need to estimate the value of the deceased person’s property and calculate how much inheritance tax is due, if any. To determine the value of any property in the estate, the recommendation is to either (1) appoint a professional surveyor, who will charge a fee for their valuation or (2) request free valuations from local estate agents. The most common method is to ask three different estate agents for free valuations and then take the average of the three.

It’s important to ask for valuations in writing (email is fine) for your records. And when asking estate agents to value a property it’s important to let them know the purpose of the valuation. Estate agents can sometimes be a bit too enthusiastic with their valuations to win instructions from clients. If estate agents know you are looking for a valuation for inheritance tax purposes they will be more realistic about the value of the property.

In our experience probate valuations tend be on the low side, which can be helpful when it comes to calculating any tax due.

To request a free probate valuation please contact us.

How much does it cost to sell an inherited property?

Apart from any general probate/legal costs, you should expect to pay a few thousand pounds towards preparing the property for sale.

One off costs include: house clearance from £100 upwards depending on the type/value of furniture and belongings. And an Energy Performance Certificate (EPC) if the property doesn’t already have one, costing around £50.

Costs for maintaining the property include council tax, gardening work and insurance. These costs are paid on a periodic basis, so the longer the property remains unsold the higher the final cost will be.

After the property is sold executors should expect to pay a commission to the sales agent (estate agent or auctioneer) of around 2% + VAT of the final sale price. And legal/conveyancing fees of around £1,000 for the average property.

Are the services of a solicitor needed to sell an inherited property?

There are two separate legal services associated with the sale of an inherited property, and each will usually be dealt with by a separate solicitor.

Legal service 1: Probate solicitor

Executors don’t necessarily need to use a solicitor for probate services, in fact a lot of money can be saved if the work is done without one. It’s not unusual for solicitors to charge up to 5%+VAT of the value of the estate for probate work, hence why DIY probate has become more popular. If you want to carry out the work yourself (or even part of the work) and save on costs then it’s worth reading around the subject first. There are a few probate guide books worth considering.

Legal service 2: Conveyancing solicitor

As with any property sale, it’s advisable to use a solicitor or licensed conveyancer to undertake all the legal work associated with selling. Even though it is possible for vendors and executors to carry out their own convening work it’s not advisable in most cases given the value of property at stake. Conveyancing by itself is complicated enough and with ever increasing levels of property fraud, by anyone’s standards it’s worth paying for professionals to handle the sale, even if it’s just for peace of mind.

Is stamp duty payable on inherited properties?

No, stamp duty is not taxed on an inherited property. However, beneficiaries should be aware that if they are in the process of buying their own home they might be liable to paying a higher rate of stamp duty if they own (all, or part of) another property – and that includes an inherited property. There are exemptions though; if someone inherits less than a half-share in a property in the 3 years before buying their own home they will not be liable for the higher rates of stamp duty.

Do inherited properties have to be sold?

There’s no legal requirement to sell an inherited property, but if executors need to raise funds to pay inheritance tax, or wish to divide the value of the deceased’s estate amongst the beneficiaries, then selling the deceased’s property makes obvious sense.

Issues to consider when renting out an inherited property

When an executor decides to keep an inherited property as a rental investment they should be mindful of Capital Gains Tax (CGT) when it eventually comes to selling. If an inherited property is not sold until a few years after the grant has been issued then the value of the property will most likely have increased, which could lead to the executors incurring a CGT liability, explained further in the next section.

Being a property landlord is no easy task; executors should carry out the same assessment as any other landlord would; considering the rental demand for the property, the cost of upkeep and increasing burden of legislation on buy-to-let landlords. Also bear in mind that inherited properties are often not in the best state of repair, so bringing the property up to a fair standard could be costly, especially if gas and electricity systems need to be replaced to meet current safety standards.

What taxes are due for inherited properties?

The two main taxes to consider when inheriting property are inheritance tax and capital gains tax.

Inheritance tax – executors are responsible for calculating the amount of inheritance tax due to HMRC. As of 2017/2018 inheritance tax is payable at a rate of 40% on estates valued over £325,000. Payment of inheritance tax is due within 6 months of the death of the deceased, after which HMRC will begin charging interest on the amount due. The estate won’t have to pay tax if all assets pass to the deceased person’s spouse or charity.

Capital Gains Tax – if there is an increase in the value of the deceased person’s property from the time of death until the time of sale then Capital Gains Tax (CGT) might be liable. For example, if the value of a property increased by £20,000 between the time of death until the time of sale then CGT would be payable on the gain less a £11,300 CGT allowance (correct at 2017/2018). The CGT amount would be 28% of (£20,000 less £11,300) £8,700 = £2,436. However, executors may qualify for a full exemption during the administration period – i.e. the time it takes to settle the deceased persons affairs and obtaining grant of probate. The exemption period is the year of death and the following 2 tax years.

Tips for maintaining an empty property

When a loved one leaves behind a property the task of clearing out their personal belongings can be an upsetting experience, but it’s a necessary task if the property is to be sold. It’s quite common for executors to remove all items of monetary or sentimental value before asking a house clearance company to remove everything else. And it’s worth doing this sooner rather than later because empty properties are more prone to break-ins/burglary than occupied properties.

Empty properties represent a higher insurance risk, so it’s important to make sure the insurance company are updated with the status of the property. Be prepared to pay a higher insurance premium, vacant properties represent a higher risk to insurers and premiums can be up to 3 times higher than occupied properties.

A requirement of an empty property insurance policy will most likely require the property to be inspected every week or two, for the letter box to be sealed, for utilities to be turned off and water system drained down.

Apart from all the form filling, one of the main gripes for executors is having to inspect and maintain the deceased person’s property until the time it’s sold. It’s an important responsibility, and not just for insurance purposes. If an empty property is not inspected on a regular basis any problems that haven’t been dealt with can quickly get out of hand. For example, a broken window can be a sign to vandals or squatters that a property is empty, so becomes a target for attack. Attending to these kinds of issues and keeping the garden from overgrowing should be a top priority. If the neighbours are known and trusted then it can be worthwhile asking if they will keep an eye on the property as well.

Securing the legal title of an inherited property

Protecting the bricks and mortar of the property is one thing, but executors should also be aware of the threat to the legal title (rights to ownership) of the property. In the same way as the legal title of a property is updated when it’s sold, criminals are able to apply for loans against a property and even attempt to sell a property if steps are not taken to protect the legal title, which is registered with a government department called HM Land Registry.

Vacant properties without a mortgage (or any other loans/charges) secured on them are particularly vulnerable to title fraud because correspondence to the property might not reach the owner in good time, or might be intercepted in the post.

Land Registry have launched a free service to help property owners combat title fraud. The Property Alert Service only takes a few minutes to set up, it then monitors the title of the property and sends an email alerts when certain activity occurs, so action can be taken if necessary.

If the property cannot be found in the Land Registry database it might be because the property is unregistered. That’s not unusual for inherited properties that have been in the same ownership for many years and were purchased before it was compulsory to register the title of the property. Registering a property is a job best carried out by a solicitor, the turnaround time is approximately 2 months.

Should I pass all my executor duties to a solicitor?

With any luck, most people only have the responsibility of being an executor once or twice in their lifetime, if at all. And the same applies for selling a property. Getting to grips with both responsibilities (especially when grieving the loss of a loved one) can be difficult, so it’s fairly common to pass on some of the responsibility to a third party, such as a solicitor.

But executors should be careful about what responsibilities they delegate to a solicitor. In our opinion, tasks such as the sale of high value assets is something that should be carried out by the executors, not the solicitor. It doesn’t matter how much you trust your solicitor, keep the sale of high value assets in your own hands.

Is it worth carrying out repairs before selling?

Many of the inherited properties we’re invited to see have been empty and neglected for many months, sometimes years. And in a lot of cases properties have not been updated or maintained in the years before the owner passed away.

Rather than embarking on a project to modernise the property, we suggest spending the least amount of money possible, limiting the spend to essential repairs only.

Unless improvement work is carried out at trade prices, it’s very difficult to recover the cost of work on resale. And there’s no shortage of buyers looking for a project, especially at auction.

What to expect when selling a retirement property?

If the deceased estate includes a retirement property, be prepared for more bills and a longer wait to sell the property. The resale market for park homes, retirement flats and assisted living accommodation is much slower than normal properties, in fact a report by the BBC found that half of new-build retirement homes sell at a loss.

The service charges for retirement properties can be very high, it’s not uncommon to see annual service charges of £4,000 plus other costs such as council tax and utility bills. As such a quick sale would be ideal in order to keep costs down, but unfortunately a quick sale for these types of properties would mean selling significantly below market value, and for that reason it’s unusual to see them selling at auction.

In the not too distant past there have been reports in the national press of unfair practices from the freeholders and managing agents of retirement properties, but most operators have now cleaned up their act. If you encounter problems that cannot be resolved directly with the freeholder it can be a good idea to contact the Leaseholder Advisory Service or the Leasehold Knowledge Partnership.

Why do people sell inherited properties at auction?

According to the Office for National Statistics, the average life expectancy in the UK is 81.6 years (last reported in 2015). And not surprisingly around that age a person’s priorities change; whereas once a new kitchen suite seemed like a good idea, in later life the investment doesn’t seem so important. The focus is often to live with the least amount of change or disruption as possible.

It’s for this reason that the majority of inherited properties are not in the best state of repair, ranging from unmodernised to severely dilapidated. Selling these types of properties through an estate agent can be difficult because the executor is often motivated to sell fairly quickly and the buyer knows it, so prices are often chipped away stage by stage as problems with the property crop up. The final sale price can end up being very low when selling through an estate agent.

But with an auction the buyer is no longer in control, there’s no opportunity to chip away at the price because bidding can only go one way – up! At auction the buyer has control over the sale, and prospective buyers will offer their best bid based on the potential of the property rather than picking holes and identifying problems with the property. As a result, auction sales often achieve final prices well above expectations, plus the executor benefits from an immediate sale.

When an inherited property should not be sold at auction

As with any property, inherited or not, auction is best suited for selling properties in a poor state of repair or with development potential. But if the property’s in a good state of repair (and as long as there’s no major rush to sell) it’s advisable to use the services of a high street estate agent to achieve the best final sale price.

Should executors accept offers received via their solicitor?

The vast majority of probate and conveyancing solicitors are quite rightly viewed as trustworthy professionals, and they are regulated for the specific legal work they do. But it’s important to know the difference between the work a solicitor is regulated and trusted to do, versus any extra help they offer.

In the case of inherited properties, that “extra help” often includes assisting with the sale, or more specifically, introducing a buyer. Even though executors and beneficiaries sometimes want to dispose of an inherited property quickly, executors should be careful when it comes to accepting a “quick and easy” offer. To put it one way, that offer is more often than not from a close business associate of the solicitor!

To be sure of realising the best sale price executors are strongly advised not to give solicitors power of attorney for the sale of any high value assets (e.g. property). And it’s not necessarily because a solicitor might manipulate the sale (to one of their property developer friends – which does happen, a lot!), but because a solicitor’s interests are not always aligned with those of the executor or beneficiaries.

Quick Help
Our comprehensive guide to selling inherited property will give you all the information you need to navigate the probate property sale process. But if you have specific questions you might find the quick links below an easier way to find the answers you need.

Find an auctioneer
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🔍 Also see

Probate guide books and further information

For further information about dealing with the financial affairs of someone who has died the Citizens Advice Bureau website has some useful information.  And for up-to-date details of legislation relating to probate please visit the government website and the HM Court and Tribunal website for the latest probate forms. The money advice service website also has some useful information about when to use a probate specialist of solicitor.

There are a number of useful books available on the subject of probate, with chapters on selling inherited property. Our top picks are:

Title: Wills, Probate and Inheritance Tax For Dummies (UK edition)
Author: Julian Knight
Pages: 328 pages
ISBN: 0470756292
Title: Probate: The guide to obtaining grant of probate and administering an estate
Author: Gordon Bowley
Pages: 194 pages
ISBN: 1845284097
Title: Probate: A straightforward guide to obtaining a grant of probate and administering an estate
Author: Regina Meizoso
Pages: 134 pages
ISBN: 0995759006
Title: Probate and the Law : A Straightforward Guide
Author: Julie Peters
Pages: 160 pages
ISBN: 184716563X

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