Can You Rent Out an Inherited House?
Inheriting a property often comes with mixed emotions. Alongside dealing with the loss of a loved one, you may suddenly find yourself responsible for a home that you hadn’t planned to own. Once probate has been completed and ownership has transferred, one of the biggest decisions you’ll face is whether to sell the property or
Inheriting a property often comes with mixed emotions. Alongside dealing with the loss of a loved one, you may suddenly find yourself responsible for a home that you hadn’t planned to own. Once probate has been completed and ownership has transferred, one of the biggest decisions you’ll face is whether to sell the property or rent it out.
For many people, renting an inherited house can provide a valuable source of additional income while allowing them to retain ownership of an asset that could continue to increase in value. However, becoming a landlord also brings legal responsibilities, ongoing costs and financial commitments that shouldn’t be underestimated.
So, can you rent out an inherited house?
The simple answer is yes. Once you legally own the property, you are generally free to let it to tenants. However, before advertising the property, you’ll need to consider factors such as the mortgage, landlord legislation, tax obligations, insurance and whether becoming a landlord is actually the right decision for your circumstances.
This guide explains everything you need to know about renting out an inherited house in the UK, helping you understand both the opportunities and the responsibilities involved.
Can you legally rent out an inherited house?
Yes. Once the property has been legally transferred into your ownership, you can usually rent it out just like any other residential property.
If the house forms part of an estate, you’ll normally need to wait until probate has been completed before granting a tenancy agreement. Until ownership has officially transferred, the executor is responsible for managing the estate.
If more than one person inherits the property, all owners should agree before tenants move in. Decisions such as whether to rent the property, who will manage it and how rental income will be shared should ideally be discussed at an early stage to avoid disagreements later.
Before advertising the property, it’s also worth checking whether there are any legal restrictions affecting its use, such as restrictive covenants or mortgage conditions.
Should you rent or sell an inherited property?
One of the most common questions beneficiaries ask isn’t whether they can rent the property—it’s whether they should.
There isn’t a right or wrong answer. The best decision depends on your financial goals, your personal circumstances and how much time you’re willing to dedicate to managing the property.
Renting allows you to retain ownership while generating a monthly income. If property prices continue to rise, you may also benefit from long-term capital growth. This can make an inherited property an excellent investment, particularly if it’s located in an area with strong rental demand.
Selling, however, provides immediate access to the property’s value without the ongoing responsibilities of being a landlord. For some people, especially those who live far from the inherited property or simply don’t want the commitment of managing tenants, selling offers a much simpler solution.
The comparison below highlights some of the key differences.
| Renting the Property | Selling the Property |
|---|---|
| Generates regular monthly rental income | Provides immediate access to the property’s value |
| Potential for long-term capital growth | No ongoing maintenance or landlord responsibilities |
| Allows you to retain ownership of the property | No risk of void periods or difficult tenants |
| Ongoing maintenance and legal compliance required | Simple, one-off transaction |
| Rental profits may be subject to Income Tax | Capital Gains Tax may apply depending on your circumstances |
When making your decision, think beyond the financial return. Ask yourself whether you’re comfortable taking on the legal responsibilities, maintenance and administration involved in becoming a landlord.
What if the inherited property still has a mortgage?
Many inherited homes still have an outstanding mortgage.
If this is the case, one of the first things you should do is contact the mortgage lender.
Most residential mortgages don’t automatically allow the property to be rented out. Letting the property without informing the lender could breach the terms of your mortgage agreement.
Depending on your circumstances, the lender may:
- grant Consent to Let, allowing you to rent the property for a temporary period
- ask you to switch to a buy-to-let mortgage
- require you to refinance the borrowing into your own name
Every lender has different criteria, so it’s important to understand their requirements before advertising the property.
If you need a buy-to-let mortgage, the lender will usually consider several factors, including your income, your credit history, the property’s value and the amount of rent you expect to receive.
Many lenders also require the anticipated rental income to comfortably exceed the monthly mortgage repayments.
If the property no longer has a mortgage, this removes one significant expense, although you’ll still need to budget for maintenance, insurance and other landlord costs.
Preparing an inherited property for tenants
Before welcoming tenants into an inherited home, it’s worth taking the time to ensure it’s in good condition.
Many inherited properties have been occupied by the same owner for many years and may require updating before they’re ready for the rental market.
Start by carrying out a thorough inspection of the property. Look for any signs of damp, roof damage, outdated electrical systems or plumbing issues that could require attention before the property is occupied.
You should also check that the heating system is working correctly, all appliances are safe to use and the property meets current safety standards.
Simple cosmetic improvements can also make a significant difference.
Fresh paint, new flooring, modern lighting and well-maintained gardens can improve the property’s appearance and help attract higher-quality tenants.
If the property requires significant refurbishment, it’s worth calculating whether the increased rental income will justify the cost of the improvements.
How much does it really cost to become a landlord?
One of the biggest mistakes first-time landlords make is focusing solely on the rental income while underestimating the ongoing costs of owning a rental property.
Although rental income can provide an excellent additional source of revenue, there are several expenses you’ll need to budget for throughout the year.
Mortgage repayments are often the largest monthly commitment, but they’re only one part of the overall cost of renting out a property.
You’ll also need to consider landlord insurance, annual gas safety inspections, electrical safety checks, Energy Performance Certificate improvements where necessary, letting agent fees, maintenance costs, emergency repairs and periods when the property may be empty between tenants.
If the boiler fails, the roof develops a leak or appliances need replacing, these costs will usually fall to you as the landlord.
For this reason, many experienced landlords recommend setting aside an emergency maintenance fund to cover unexpected repairs.
Before deciding to rent out an inherited property, prepare a realistic budget that includes both expected annual costs and a contingency for unforeseen expenses. Doing so will give you a much clearer understanding of whether the property is likely to generate a worthwhile return.
Landlord insurance: Do you need it?
Once you decide to rent out an inherited property, it’s important to make sure you have the right insurance in place.
Many people assume that their existing home insurance policy will continue to provide adequate cover once tenants move in. In reality, most standard home insurance policies are designed for owner-occupied properties and may no longer be valid once the property is rented out.
Landlord insurance is specifically designed to protect rental properties and can provide much broader cover. Depending on the policy you choose, it may include protection for the building itself, landlord-owned contents, accidental or malicious damage caused by tenants, loss of rental income following an insured event, legal expenses and public liability cover if someone is injured on your property.
The level of cover you need will depend on factors such as the property’s value, its location and the type of tenants you plan to let to. If the inherited property is leasehold, it’s also worth checking what insurance is already provided through the freeholder or management company.
Although landlord insurance isn’t always a legal requirement, many mortgage lenders insist upon it as a condition of a buy-to-let mortgage. Even if it isn’t mandatory, having the correct cover can provide valuable peace of mind should something unexpected happen.
How much rent should you charge?
Setting the right rental price is one of the most important decisions you’ll make as a landlord.
Charging too much may discourage potential tenants and leave the property empty for longer than necessary. Charging too little could reduce your income and make it more difficult to cover your ongoing costs.
A good starting point is researching similar properties that are currently available to rent in your local area. Property portals such as Rightmove and Zoopla can help you compare rental prices, while local letting agents can usually provide a free rental valuation based on current market conditions.
When deciding on the rent, consider more than just your mortgage repayments. You should also allow for insurance premiums, routine maintenance, safety inspections, letting agent fees, potential void periods and unexpected repairs.
If the property has features that are particularly attractive to tenants, such as off-road parking, a large garden, a recently renovated kitchen or excellent transport links, you may be able to achieve a higher rental value.
Setting a realistic rent from the outset often leads to shorter vacancy periods and attracts a wider range of prospective tenants.
What taxes do you pay when renting out an inherited house?
Receiving rental income can provide a valuable additional source of revenue, but it’s important to understand the tax implications before becoming a landlord.
Income Tax
Rental income is generally subject to Income Tax.
If you rent out an inherited property, you’ll usually need to declare your rental profits to HM Revenue & Customs through a Self Assessment tax return.
It’s important to remember that tax is usually paid on your profit, not on the total rent you receive.
Your profit is calculated by deducting allowable expenses from your rental income.
The amount of tax you pay will depend on your overall taxable income and your personal tax circumstances.
Because tax legislation can change, it’s always sensible to seek advice from a qualified accountant if you’re unsure how much tax you may owe.
Allowable expenses
One benefit of becoming a landlord is that many legitimate costs associated with managing the property may be deductible when calculating your taxable rental profit.
Depending on your circumstances, allowable expenses may include landlord insurance, letting agent fees, accountancy fees, routine repairs, gardening, cleaning of communal areas, service charges, ground rent on leasehold properties and certain maintenance costs.
However, improvements that significantly enhance the property’s value are generally treated differently for tax purposes than routine repairs.
Keeping accurate records of all income and expenditure throughout the year will make completing your tax return much easier.
Capital Gains Tax
In many cases, any gain is calculated using the property’s market value at the date of inheritance (often referred to as the probate value) and the eventual selling price.
If the property has increased in value during your ownership, Capital Gains Tax may be payable, depending on your individual circumstances and any available allowances.
If you’re considering selling a rental property, professional tax advice is recommended before proceeding.
Your legal responsibilities as a landlord
Owning a rental property comes with a wide range of legal responsibilities designed to protect both landlords and tenants.
Before letting an inherited property, it’s important to understand these obligations and ensure the property complies with current legislation.
As a landlord, you’re responsible for maintaining the property in a safe condition throughout the tenancy. This includes ensuring heating, hot water, sanitation, electrical installations and gas appliances remain safe and in good working order.
If repairs are needed, they should be carried out promptly to prevent problems from becoming more serious.
Providing safe accommodation isn’t just good practice, it’s a legal requirement.
Failure to comply with landlord legislation can result in financial penalties and, in some cases, make it more difficult to regain possession of the property if disputes arise.
Gas and electrical safety
Safety should always be one of your highest priorities.
If the property has gas appliances, you’ll usually need an annual gas safety inspection carried out by a Gas Safe registered engineer. After the inspection, you’ll receive a Gas Safety Certificate confirming the appliances have been checked.
Electrical safety is equally important.
For most privately rented properties in England, landlords must arrange periodic inspections of the property’s electrical installation by a qualified person. Any issues identified during the inspection should be resolved within the required timescales.
It’s also good practice to ensure that any electrical appliances you provide, such as ovens, washing machines or refrigerators, remain safe for tenants to use.
Smoke alarms and carbon monoxide alarms
Landlords are generally required to fit smoke alarms on every storey of the property used as living accommodation.
Where there are fixed combustion appliances, carbon monoxide alarms may also be required.
Before a tenancy begins, you should test all alarms to confirm they are working correctly.
Although these devices are inexpensive, they play an essential role in protecting tenants and meeting your legal responsibilities.
Protecting your tenant’s deposit
If you take a tenancy deposit, it must usually be protected in a government-approved tenancy deposit protection scheme within the required legal timeframe.
You’ll also need to provide tenants with prescribed information explaining where their deposit is held and how it will be returned at the end of the tenancy.
Failure to comply with deposit protection rules can result in financial penalties and may affect your ability to regain possession of the property through certain legal procedures.
Energy Performance Certificates (EPCs)
Most rental properties require a valid Energy Performance Certificate (EPC) before they can be legally let.
An EPC measures the property’s energy efficiency and provides recommendations for improvements.
Minimum energy efficiency standards currently apply to most privately rented properties, meaning homes generally need to achieve at least the required EPC rating before a new tenancy begins unless a valid exemption applies.
If the inherited property has an older heating system, poor insulation or single-glazed windows, you may need to carry out improvement works before renting it.
Improving the property’s energy efficiency can also reduce tenants’ energy bills, making the property more attractive in a competitive rental market.
Right to Rent checks
If your inherited property is located in England, you’ll usually be required to carry out Right to Rent checks before tenants move in.
These checks confirm that prospective tenants have the legal right to rent residential property in England.
The checks involve verifying identity documents and retaining appropriate records.
Many landlords choose to use a letting agent to carry out these checks, but if you’re managing the property yourself, it’s important to understand the process and ensure it’s completed correctly.
Failure to comply can result in significant financial penalties.
Do you need a landlord licence?
Many first-time landlords are surprised to learn that some rental properties require a licence.
Licensing requirements vary depending on where the property is located and how it is occupied.
For example, Houses in Multiple Occupation (HMOs), where several unrelated tenants share facilities, often require mandatory licensing.
Some local authorities also operate selective licensing or additional licensing schemes covering certain areas or property types, even where the property isn’t an HMO.
Before advertising an inherited property for rent, it’s worth contacting your local council to check whether any licensing requirements apply.
Obtaining the correct licence before tenants move in can help you avoid enforcement action and financial penalties later.
Should you use a letting agent?
Managing a rental property yourself can save money, but it also requires time, organisation and a good understanding of landlord legislation.
Many first-time landlords choose to appoint a professional letting agent, particularly if they live a long distance from the inherited property or have little experience managing tenants.
Letting agents can provide different levels of service.
Some simply advertise the property and find suitable tenants, while others offer a fully managed service that includes collecting rent, arranging repairs, carrying out inspections and dealing with tenant queries throughout the tenancy.
Although management fees reduce your monthly rental income, many landlords consider them worthwhile for the convenience and peace of mind they provide.
What if multiple people inherit the property?
It’s quite common for an inherited property to be left to more than one beneficiary. For example, siblings may inherit their parents’ home jointly, or several family members may each receive an equal share of the property.
While this can work well, it also means that important decisions usually need to be made together.
Before renting out the property, all owners should discuss what they hope to achieve. Some beneficiaries may see the property as a long-term investment, while others may prefer to sell their share and receive the money immediately. Reaching an agreement early can help avoid disagreements later.
If everyone decides to let the property, there are several practical matters to consider. You’ll need to agree how rental income will be divided, who will pay for repairs and maintenance, how major decisions will be made and who will manage the tenancy on behalf of the owners.
Some families choose to appoint one person to act as the main point of contact for tenants and contractors, while others prefer to use a professional letting agent to manage the property independently.
It’s also sensible to have a written agreement between the owners covering how expenses will be shared and what should happen if one beneficiary later wants to sell their share.
If disagreements arise and an agreement cannot be reached, it’s worth seeking independent legal advice before making any significant decisions.
What happens if the property already has tenants?
Not every inherited property is empty.
If you’ve inherited a property that already has tenants living there, the existing tenancy agreement doesn’t automatically end when the owner passes away.
Instead, the tenancy usually continues under the same terms, and ownership of the property transfers to the beneficiary or beneficiaries once probate has been completed.
As the new landlord, you’ll take on the legal responsibilities associated with the tenancy. This includes maintaining the property, protecting any future deposits correctly, carrying out repairs and complying with current landlord legislation.
You should also introduce yourself to the tenants as soon as possible, explain who will be managing the property moving forward and provide updated contact details for reporting maintenance issues.
If you’re unsure about the status of an existing tenancy, it’s advisable to ask your solicitor to review the tenancy agreement during the probate process.
Advantages of renting out an inherited house
For many people, renting out an inherited property can provide long-term financial benefits.
Perhaps the biggest advantage is the opportunity to generate a regular monthly income while continuing to own the property. If rental demand is strong in your area, the income received each month can help cover the mortgage, maintenance costs and other outgoings, while still producing a profit.
Keeping the property also means you may benefit from future increases in house prices. If the property’s value rises over the coming years, your investment could become significantly more valuable.
Renting may also allow you to keep a property that has sentimental value. Rather than selling a family home immediately, some beneficiaries prefer to retain ownership while generating an income from it.
In some cases, an inherited property may eventually become a home for another family member or provide additional financial security during retirement.
Disadvantages of renting out an inherited house
Although becoming a landlord offers many benefits, it also comes with responsibilities that shouldn’t be underestimated.
Owning a rental property means accepting responsibility for repairs, maintenance and legal compliance throughout the tenancy.
Unexpected costs can arise at any time. Boilers break down, roofs develop leaks, appliances need replacing and properties occasionally suffer accidental damage.
There may also be periods when the property is empty between tenants. During these void periods, you’ll still be responsible for mortgage repayments, insurance and other running costs without receiving any rental income.
Managing tenants can also be time-consuming. From arranging repairs and carrying out inspections to dealing with maintenance requests and keeping up with changing legislation, being a landlord requires ongoing commitment.
For some beneficiaries, these responsibilities outweigh the financial benefits of renting, making selling the property a more attractive option.
Common mistakes first-time landlords make
Renting out an inherited property can be rewarding, but many first-time landlords encounter avoidable problems simply because they’re unfamiliar with the responsibilities involved.
One of the most common mistakes is failing to inform the mortgage lender before letting the property. If your mortgage doesn’t permit letting, renting the property without consent could breach the terms of your mortgage agreement.
Another frequent mistake is underestimating the true cost of owning a rental property. Many new landlords budget for mortgage repayments but overlook ongoing expenses such as insurance, annual safety inspections, maintenance, licensing fees and emergency repairs.
Some landlords also set the rent unrealistically high, resulting in longer vacancy periods and fewer prospective tenants. Researching comparable properties and obtaining advice from a local letting agent can help you set a competitive rental price.
Skipping tenant referencing is another mistake that can become expensive. Carrying out affordability checks, obtaining references and verifying employment before granting a tenancy can significantly reduce the risk of future problems.
Legal compliance is equally important. Failing to protect a tenant’s deposit correctly, missing required safety inspections or overlooking local licensing requirements can all result in financial penalties.
Finally, many first-time landlords don’t prepare for void periods. Setting aside emergency savings to cover mortgage payments and repairs during periods without tenants can provide valuable financial security.
Learning from these common mistakes can help you become a more confident and successful landlord.
Is renting out an inherited house the right decision?
Every inheritance is different, and there is no single answer that suits everyone.
If the inherited property is in good condition, located in an area with strong rental demand and you’re comfortable taking on the responsibilities of being a landlord, renting it out could provide an excellent long-term investment and a reliable source of income.
On the other hand, if the property requires significant renovation, you need immediate access to the equity or simply don’t want the ongoing commitment of managing tenants, selling may be the better option.
It’s worth considering not only the potential rental income but also the time, costs and legal responsibilities involved.
Before making your decision, you may benefit from speaking with a mortgage adviser, accountant or financial adviser who can help you understand the financial implications based on your own circumstances.
Frequently Asked Questions
Can I rent out an inherited house straight away?
In most cases, you’ll need to wait until probate has been completed and the property has legally transferred into your name before granting a tenancy agreement.
Do I need a buy-to-let mortgage?
Not necessarily. Some lenders may grant Consent to Let, while others require you to switch to a buy-to-let mortgage. This depends on your lender’s individual policy.
Do I pay tax on rental income?
Yes. Rental profits are generally subject to Income Tax and should usually be declared to HM Revenue & Customs through a Self Assessment tax return.
Can I claim expenses against my rental income?
In many cases, yes. Certain allowable expenses, such as landlord insurance, letting agent fees and routine repairs, may be deducted when calculating your taxable rental profit.
What happens if the inherited property already has tenants?
The tenancy usually continues under its existing terms, and you’ll become the new landlord once ownership has legally transferred.
Do I need landlord insurance?
Although it isn’t always legally required, specialist landlord insurance is strongly recommended and may be required by your mortgage lender.
Can I manage the property myself?
Yes. Many landlords successfully self-manage their properties, although others prefer to appoint a professional letting agent to handle the day-to-day management.
Can I move into the property later?
Yes, although you’ll need to follow the correct legal process to end any existing tenancy before moving into the property yourself.
What happens if multiple people inherit the property?
Joint owners will usually need to agree on major decisions, including whether to rent or sell the property and how rental income and expenses will be shared.
Can I sell the property after renting it out?
Yes. Many beneficiaries choose to rent out an inherited property for several years before deciding to sell. It’s worth remembering that Capital Gains Tax may apply if the property’s value has increased since it was inherited.
Considering selling instead?
Renting out an inherited property can be an excellent long-term investment, but it isn’t the right choice for everyone. If you don’t want the ongoing responsibilities of being a landlord, need access to the property’s value or simply want a quicker and more straightforward solution, selling may be the better option.
At We Buy Any House, we specialise in purchasing inherited residential properties across England and Wales, regardless of their condition. We provide free, no-obligation cash offers, cover your legal fees, charge no estate agent fees and can complete your sale in as little as three days, or on a timescale that works for you.
If you’re considering selling your inherited house instead of renting it out, contact We Buy Any House today to discuss your options with one of our experienced property specialists.