Inherited a few rentals

[Landlord7289]

Hoping for some advice on this situation from people who may have been through similar...

I am inheriting 4 rental properties from my late father. Are there any tips or ideas people would share about this situation?

My situation is I am early 30s in full time employment, live at the opposite end of the countries to the rentals and I'm a higher rate tax payer. The income will be nice but not life changing.

Thanks

[jpucng62]

Sell them.

As a 40% tax payer you will be hit hard by tax; managing properties from afar is difficult and expensive; as IHT will have been paid there will be no CGT if you sell quickly; land lording is not something you can learn overnight & there are a multitude of pitfalls.

Good luck

[jpkeates]

Unless you've always wanted to be a landlord, I'd sell them and use the money to do something different.

Being a landlord at some distance is not easy, and being a landlord isn't all gravy either.
It's not something to do just because an opportunity comes up.

[DoricPixie]

Another vote for sell unless being a landlord is something you are particularly interested in doing. Yes, you can use a letting agency to manage the lets but ultimately the buck stops with you and in my experience a lot of letting agencies out there are pretty crap. Plus as a higher rate tax payer the slim margins you'll be making would further be eroded by the fees charged by letting agencies.

[Hudson01]

As said above, unless being a landlord has been a childhood dream (weird if it were), i vote to sell and move on. A lot of experienced LL's are selling up anyway due to a multitude of rubbish from the govt, in your position, simply reap the reward of your late fathers good financial decisions and enjoy your life.

[theartfullodger]

IHT and/or CGT exposure?

[Neelix]

IHT and/or CGT exposure?

I was wondering about that. Have you applied for probate yet ?

[Neelix]

IHT and/or CGT exposure?

I was wondering that too.

OP - have you applied for or got probate?

[mokka]

Condolences

[JK0]

I sold the ones miles away, and bought some closer to home.

[Turbine Terry]

A very warm welcome to you Landlord7289.

I represent the more upbeat and joyful side of landlording and I try to balance out any negativity on the forum. I like to think of myself as “ A young loner on a crusade to champion the cause of the innocent” and that “one man can make a difference”. OK, as you are only early thirties and maybe don’t remember Michael Knight from Knight Rider, you have probably stopped reading and now, perhaps rightly so, just think I am a bit weird!

Anyway, here comes the sensible bit. IMO it is not helpful (certainly not without knowing all the circumstances) for anyone else to make very sweeping statements such as to sell or stay, or to advise you that being a landlord is not something you can just suddenly decide to do when an opportunity arises. Without knowing your full circumstances it is impossible for anyone to properly advise you on whether you should sell or be a landlord. From the comments on this forum you would sometimes think that being a landlord is brain surgery and so not something you can pick up and learn relatively easily and do just because an opportunity comes up. I say poppycock to all that. Of course you can just suddenly decide to do it if the opportunity arises. Something happened/ an opportunity arose in all landlords lives that made them decide to want to do it – so no reason why you can’t also do it.

Yes, there are a fair few (not that many compared to other industries and business sectors) rules and regs that you simply must know, but you can find and learn the checklist of the vital ones in about 15 minutes flat. I reckon if you read online about what makes a good landlord and read about landlord fundamentals and basics, you would know most of the theory before lunchtime. Obviously the practice and experience takes time, but as and when issues and situations arise it is so easy to find the answers online. So, in the early days all you have to do is not make any rash decisions without first researching and seeking advice. As your properties are a long way away you will need to have them managed by an agent so the quality of that service will be one of your main considerations. Using an agent whilst you are learning is also useful. Some things you will also need to consider are below, in no particular order, (I am not suggesting you should answer these question on the forum, they are just for your consideration). There will be other factors and considerations that I have missed, but I am running out of time as ‘The A Team’ is on TV in 10 minutes.

1. Net profit (so after all costs and tax) – if this is low are you happy with the long term rise in property prices being your main reward?
2. Do you have existing tenants – are they long term, decent and so not too much trouble? Or, whilst you are learning the ropes will you/ your agent have to find new tenants (finding good tenants is one of the most important things a landlord needs to do IMO)
3. Are the properties currently managed by a lettings agent or not? Either way you will need to use a lettings agent due to location, and you should get detailed written confirmation of exactly what their service entails. It is vital that you still research and learn about what being a landlord entails in a similar manner as if you managed your properties yourself. That way you can be sure that your lettings agent is doing what they should do. You don’t have to use the lettings agents tradesmen if you don’t want to and not doing so will certainly save you cash. You don’t have to live locally to find your own local tradesmen to have on speed dial.
4. How happy are you to have the properties so far away from you? If you find and use a diligent lettings agent and some trusted tradesmen it is totally feasible, if not ideal, to have properties located far away. Many people with holiday lets run them from a long distance and holiday lets require much much more work as the tenants/guests are turned over normally on a weekly basis.
5. The Inheritance Tax (IHT) position and Capital Gains Tax position.
6. What EPC grade are they – potential new future EPC regs may mean that you could have a £10k cost cap liability around 2026/2028 if they are not already a grade C – read around the forum, one link below.
7. Are the properties mortgaged? – what type of mortgage (bound to be fixed rate) and when does the fixed rate period end.
8. Do you have an accountant – if not you will likely want/need one with 4 properties.

The top link below was started by someone with a similar question to yours, the other 2 are about EPC’s. Good luck with your decision. Being a landlord is not for everyone, but I believe it is still a good time to be a landlord (and I've been doing it for 20+ years so I know what it used to be like).

Greetings, I Come in Peace - LandlordZONE Forums
Potential New EPC Regs - Don't Panic (yet!) - LandlordZONE Forums
Brexiteer MPs campaign against Net Zero EPC targets - LandlordZONE Forums

[DPT57]

I would also suggest you sell them.

[theartfullodger]

A very warm welcome to you Landlord7289.

I represent the more upbeat and joyful side of landlording and I try to balance out any negativity on the forum. I like to think of myself as “ A young loner on a crusade to champion the cause of the innocent” and that “one man can make a difference”. ............................

... I can just about remember having that sort of view on landlording......

[islandgirl]

Excellent post from TT above - I vote for lots more thinking and planning rather than a knee jerk "sell". The OP may wish to increase the portfolio and look to retire early from his job - who knows what the full picture is? There may be long term tenants who are no problem and a good agency could manage them (ahem I am a huge critic of agencies but there must be some good ones out there....somewhere...)

[Turbine Terry]

... I can just about remember having that sort of view on landlording......

Yes, perhaps my implication that landlording was "joyful" was a bit of a stretch. Joyful was not the best choice of word to use to describe being a landlord. IMO it's more often than not still better than doing a 'proper' job though