Amending a will to include residential BTL property - what to check

[laimtoh5]

I'd like to ask a brief question about creating a new will that is clear about what the executor should do when I die.

I made a will before becoming a landlord (sole) owner of residential buy to let property, and I don't have anyone I can name as an executor, and need to make a new one to reflect this and some other changes.

I live in England, am unmarried and not in a legal partnership with anyone else.

I self-manage my properties and they are all in England.

Of high importance to me is that my tenants are looked after properly in this event, and not face any uncertainties due to avoidable legal problems during the probate process.

Before I approach a familty solicitor for advice (who should know how to help me, but I always like to do some of my own research when I approach a new topic), would anyone be able to guide me on a few questions I should ask, please?

I have a list of questions already, which includes:

- do I need to keep them updated with the latest AST?
- what steps they will take to inform my tenants of the process now they're executors?
- can I ask that they attempt to sell the properties with in-situ tenants to another landlord, to allow them to stay if they wish?
- to explain the situation the lenders will be in (probably buried in the small print I admittedly haven't read), are they legally obliged to let the executor manage the sale of the property and not just evict the tenants, or is that down to the lenders' own T&Cs?
- I'll check anyway, but expect the executor (being a solicitor) will arrange all the necessary admin, such as paying service charges (at the appropriate stage of the probate), mortgages, appointing a letting agent if they feel that's appropriate until sale, appointing an estate agent to sell them etc. I'll ask them for a roadmap so I'm clear what they plan to do.

[jpkeates]

The main thing you will need to address is that the executor has a duty to maximise the value of the estate and you don't want them to do that, because selling to another landlord will introduce a discount.
You will need to be clear about how much you want the executor to discount and how long they should market the property trying to find another landlord before selling them elsewhere.

Although it isn't relevant to your question, as it stands today, any landlord buying a tenanted property needs their head examined (unless the deal is amazing beyond reason).
I've done it successfully in the past, but wouldn't risk it now.

[Hudson01]

You mention your desire for the executor to be kind to your tenants but who is the beneficiary ? However respectfull the executor is the one who inherits can simply evict them all and sell the lot ! To not put a finer point on it all......... when you're gone you have zero say.......although i see your intentions are good and it would be nice if more landlords thought like you.

[ash72]

Making sure your T's are looked after would be hard to control, unless they became the beneficiary of your estate. You need to really think what you want to do, as the first person to get paid from your estate would be the tax man. I would keep things simple, start selling your BTL's and enjoy the fruits of your labour.

[Neelix]

The role of the executor is to try to carry out your wishes laid down in your will

the more complicated you make it, the more difficult it becomes , the longer it will take and the costs will rise

if you have no beneficiaries, make sure it’s 100% clear which charities you want to benefit from your assets

[Flashback1966]

When the executors notify the banks. They are likely to restrict or freeze your bank accounts. I am wondering if a business bank account is better then say a personal bank account, so that your tenant can continue to pay the rent into that. Otherwise how would they pay the rent?

You could have mortgage payment out of that business bank account. Keep enough money, so it is automatic.

Try to keep as many expenses on standing order / direct debit. So everything is ticking over.

I suggest you prepare a bundle with AST, EPC, gas certificate, guarantees, inventory etc.... Scan into PDF format. Keep a property description.

Write a brief description of each property. Things which might need doing or have been done. E.g. fitted new boiler 2018. Neighbours fence to the right. Roof needs replacing x years. Lease remaining etc.... Generally things for handover to the new landlord (or someone else).

Have a list of what your assets are worth (less liabilities). You need a specific valuation on the date. Try to keep it up to date every few years.

Also a calendar of when things are due e.g. insurance renewal, gas certificate, service charge .....

Keep a list of username and logins..... phone pin keep a back up on the cloud.

Have a record of rent payments. So who ever is looking after this know what tenants have paid or not paid. Perhaps having a book-keeper might be useful?

A list of recommended tradesmen e.g. plumbers.....

You are using a solicitor to be an executor, but you have a running business to manage those properties. Who manages that? A solicitor will not run your business.

Some tenants may stop paying rent, once they find out. Others will keep paying....

Your beneficiaries, may not know about managing property..... Either disciplined or experienced.....

I suggest you offer the property for sale to your tenants (in the first instance). Then to another landlord.

You can register your will....

[ExpertInAField]

This is something I thought about last year.

I'm in the lucky position of all my properties being free and clear but also in the unlucky position of having no next of kin (Cancer a not kind to my family).

So that's when I made the decision to put in my will that the tenants will be the beneficiaries of the places they are in at the time of my death. There's no one else to give them to, so why shouldn't they have them.

I spoke to my solicitor and he arranged it all. My tenants don't know this as I want it to be a surprise.

[Neelix]

on the basis you have a business account, I think you should talk to your bank about what would happen on your death. A personal account will prevent money going in and out as soon as the bank is notified of your death

[Hudson01]

I spoke to my solicitor and he arranged it all. My tenants don't know this as I want it to be a surprise.

That is a great thing to do, i wonder if Shelter/Gen Rent would talk about that when they are saying how bad landlords are ??

[laimtoh5]

Thanks for everyone's replies so far, that's been very helpful.

I'm in the same positional (familially) as ExpertInAField, so your idea is very charitable and also neat. Any extra will go to charities as suggested in a comment above, so regarding costs etc., the eventual value of my estate isn't of any interest to me at this moment, until future circumstances change that.

On the subject of gifting the property to my tenants - an idea I hadn't considered and will give some thought as it greatly reduces their stress - I guess if they didn't want the property (where they are mortgaged and the tenants are unable to get a loan or just fearful of taking on a loan), they would effectively be evicting themselves (and would presumably benefit from the equity from the proceeds of its sale, after costs are deducted). I expect your solicitor has considered this possibility and written that into your will accordingly.

I use a business account - thanks for pointing that out (and keeping enough in it to cover 6 months' worth of portfolio expenses). I'm rather hoping I've got a decent run left, so plan to keep my all of my portfolio going until I'm gone.

So I'm fairly clear that using a will, my solicitor can be made the sole executor of my estate ahead of time (although there might be a few problems that can't be avoided - they do not run businesses - good point made there), and I should be able to agree how it's to be managed and distributed. I'll approach some to find out how they would tackle this and what it will cost me.

[Neelix]

Back to the op, as a single person your estate will almost certainly have IHT to pay. Will your estate cover this ?

[Lawcruncher]

There are any number of things the OP can do to ensure the tenants have some degree of security and protection against rents being increased. What he does has to depend on what balance he wants to strike between the tenants and charities. Possibilities include:

· Gifting the property to the tenant outright
· Granting the tenant a rent free life interest with remainder to a charity
· Granting the tenant an option to buy at a favourable price
· Granting the tenant an option to take a lease on favourable terms
· Granting the tenant the choice between taking a lease on favourable terms or buying on favourable terms