"A home is typically the most valuable asset we own in our lifetime, and so being left one in a Will is of course a great privilege"
58% of UK adults say that they expect to inherit at least one residential property during their lifetime. However, 64% couldn’t cover the high associated costs without taking out a loan, according to new research by the probate lending experts at Tower Street Finance.
Brits that are left a property in a Will this year should expect a bill of around £20,000 – and that doesn’t even include inheritance tax.
This cost - which is expected to rise over time - is made up of expenses such as house clearing, basic redecorating, standing charges for energy and water, insurance and solicitors' fees. It varies slightly depending on what the new owner decides to do with it.
If left a property in a family member’s Will (in the next 12 months), 39% said they would sell it, while 34% would keep it (and either live in it themselves or rent it out).
Cost to inherit a property (excluding inheritance tax) and put it on the market for sale: £23,800
Cost to inherit a property (excluding inheritance tax) and move into it: £19,000
Cost to inherit a property (excluding inheritance tax) and get it ready to let: £18,600
Anyone who is prepared and able to do work themselves, or shop around, could also reduce some of these costs.
Solicitor’s fees are usually the largest expense, averaging around £12k. However, experts advise that using a solicitor to manage the legal process is essential.
Clearing the property, deep cleaning it and decorating it (painting only) costs around £2,800 on average for a typical home too, but of course, this can be a lot more depending on the work that is needed – with structural work, rewiring and bathroom and kitchen renovations often costs significantly over this estimate.
Even those who plan to sell the home without doing anything to it shouldn’t expect to avoid some bills, as an empty property comes with costs too – insurance, council tax, and standing charges for utilities (gas, electric, and water) will all apply, costing around £2,000 for the average home.
Despite these hefty costs, with the current average UK property price sitting at £296,000, being left a home is likely to be a very welcome discovery – especially amongst those under 35 who are the most likely to be relying on inheritance to get onto the property ladder (16%).
However, according to the study, many (34%) are unaware of what the process is for receiving their inheritance, how long it could take for them to get the keys (36% expect it to take fewer than six months whereas the typical wait is 9-12 months), or even if they could also be liable for inheritance tax (24%).
Inherited a property? Five ways to save money on the associated costs:
1: Shop around for a solicitor: If a specific Solicitor wasn’t dictated in the Will, and you are named as the Executor, then you may be able to shop around to ensure you receive the best value for money. Solicitor fees do vary, but it’s important to read reviews or seek our personal recommendations to ensure you’ll still get a good service before you switch.
2: Clear the property yourself: Hiring a van and clearing a property yourself can save you a lot of money, but keep in mind that this is often a strenuous, emotional and time-consuming job. Sites like Freecycle can be a good way to quickly get rid of furniture that you don’t think is worth selling but are still in a good condition.
3: Sort the right storage: Once cleared, there may be some larger items that you need to put in storage temporarily. Again, the cost of storage varies a lot so it’s worth doing your homework to see where could be the best option for you and your items.
4: Tackle some home improvement yourself: If the property is in a reasonable condition and just needs sprucing up with a fresh lick of paint, then you could also save money by doing this yourself. If you’re putting the property on the market for sale or rent, then painting everything in white or neutral shades is typically recommended by property experts. Before ripping out carpets, see if they could just do with a good clean. It’s cheap and easy to hire a carpet cleaner for 48 hours and this can often make a world of difference.
5: Shop around for insurance: Even an empty home will need insuring. Use comparison sites to shop around for a good deal, keeping in mind the value of the property (and fixtures and fittings) and any potential issues that could be more likely to occur such as flooding/leaks.
Dicky Davies, Founder and Business Development Director at Tower Street Finance, added: “A home is typically the most valuable asset we own in our lifetime, and so being left one in a Will is of course a great privilege. That said, it certainly doesn’t come without its challenges and costs.
"Typically, properties are left to children or grandchildren, and according to HMRC reports, homes make up 54% of the average estate value total at death.
"What’s more, around a third of estates (that include a property) break the inheritance tax threshold - meaning that many will face another bill to cover this, on top of things like solicitors’ fees, clearing costs and insurance.”
