This week, I worked with a client facing a situation that many might describe as both a blessing and a challenge: inheriting a family home filled with memories, but also with shared ownership and financial implications.
My client and his sister had recently inherited their late parents’ home. Naturally, the simplest route would be to sell the property and divide the proceeds. However, for my client, this house was more than bricks and mortar—it was his childhood home and he wanted to move in there with his wife, but it presented a bit of a financial puzzle.
The Challenge: Keeping the Family Home Without Selling Their Own
The inherited property was mortgage-free, as was the home where my client and his wife currently live. They are both still in work but having enjoyed a mortgage-free lifestyle for some years, they didn’t want new residential mortgage. At the same time, they are not ready to sell their current home.
But to retain full ownership of the inherited home, my client needed to buy out his sister. So, how could they raise the necessary funds without disrupting their mortgage-free status or selling either property?
The Solution: Let-to-Buy Mortgage with Capital Raising
The answer came in the form of a let-to-buy mortgage—a strategic solution that allows homeowners to rent out their current home while purchasing a new one. In this case, we arranged a let-to-buy mortgage on their current residence, allowing them to raise the capital needed to buy out the brothers, without taking out a traditional residential mortgage.
This approach enabled the couple to:
My client and his sister had recently inherited their late parents’ home. Naturally, the simplest route would be to sell the property and divide the proceeds. However, for my client, this house was more than bricks and mortar—it was his childhood home and he wanted to move in there with his wife, but it presented a bit of a financial puzzle.
The Challenge: Keeping the Family Home Without Selling Their Own
The inherited property was mortgage-free, as was the home where my client and his wife currently live. They are both still in work but having enjoyed a mortgage-free lifestyle for some years, they didn’t want new residential mortgage. At the same time, they are not ready to sell their current home.
But to retain full ownership of the inherited home, my client needed to buy out his sister. So, how could they raise the necessary funds without disrupting their mortgage-free status or selling either property?
The Solution: Let-to-Buy Mortgage with Capital Raising
The answer came in the form of a let-to-buy mortgage—a strategic solution that allows homeowners to rent out their current home while purchasing a new one. In this case, we arranged a let-to-buy mortgage on their current residence, allowing them to raise the capital needed to buy out the brothers, without taking out a traditional residential mortgage.
This approach enabled the couple to:
- Stay mortgage-free in the new (inherited) home.
- Retain ownership of their current home, turning it into a rental property.
- Use the rental income to cover the costs of the new let-to-buy mortgage.
They’re still deciding whether to structure the let-to-buy mortgage as interest-only or repayment, but the flexibility of the product gives them breathing room to explore what works best.
From Homeowners to Landlords—Gently
While they’ve never been landlords before, they already have a young family ready to move in as tenants and plan to manage the property themselves. Their goal is to try it out for a few years to see if being landlords is for them.
Additionally, since my client is a higher-rate taxpayer and his wife works part-time, we discussed a tax-efficient way to structure the rental income. Changing the ownership of the rental property from joint tenants to tenants in common can help balance the tax liabilities, and they are seeking separate legal and tax advice on this aspect.
A Note on Stamp Duty Land Tax (SDLT)
Because they will ultimately own two properties—the inherited home and their current residence—Stamp Duty Land Tax (SDLT) at the higher rate for additional properties will apply on the share of the inherited property they are buying from the sister.
A Thoughtful Way Forward
For anyone who finds themselves as an "accidental landlord"—whether through inheritance, life changes, or evolving financial goals—a let-to-buy mortgage can be a solution. It provides flexibility, preserves existing assets, and creates opportunities for passive income.
If you're in a similar situation and wondering how best to move forward, get in touch. There’s often more than one path available—and with the right advice, it can lead to both financial stability and personal satisfaction.
Please note:
Buy-to-let (BTL) property investments are not regulated by the Financial Conduct Authority (FCA) unless the property is let to a close family member or if the mortgage is classified as a consumer buy-to-let.
Before making any decisions regarding buy-to-let properties, it is strongly recommended you seek independent legal, tax, and financial advice.
Haverfords Ltd does not provide legal or tax advice. We are authorised and regulated by the Financial Conduct Authority. FCA No: 989644
Iwona - Senior Mortgage and Protection Adviser
