Buying Out Sibling from Inherited House: Mortgages & Other Options

Losing a loved one is challenging, and handling the financial and property matters afterward can be tough. Inheriting a property with siblings in the UK can add complexity. You might sell the property and divide the proceeds. Another option is to keep the house together. Alternatively, one sibling may choose to buy out the others to keep the property.

In such situations, understanding how to finance a buyout becomes crucial. One popular solution is to take out a mortgage specifically designed for buying out siblings from an inherited propertyA property inherited by a borrower.. But how does this process work in the UK? What are the eligibility criteria, and what financial implications should you consider?

Post Topics

What happens if one sibling is buying out another?

Can I get a mortgage to buy out my siblings?

What do you need to buy a sibling out of an inherited house in the UK?

Do I have to pay stamp duty when buying out a sibling?

What other fees do I need to consider when getting a mortgage to buy out a sibling?

What happens if siblings cannot agree, and a forced sale is needed?

Next Steps

FAQs- Mortgage to buy out sibling from the property

What happens if one sibling is buying out another?

To buy your parent’s house from a sibling, you first need their agreement as co-owners. Unless the will states otherwise, ownership of the inherited property is shared equally – you are joint tenants, in other words.

To record your intention to buy out the share of other siblings, you must formally submit a document to that effect to the Land Registry, together with a copy of the grant of probate – typically held by the executors of the will – which also needs to show the signatures of yourself and the siblings involved.

Can I get a mortgage to buy out my siblings?

Regardless of the will’s division, you may wish to buy your siblings’ shares in an inherited house. After determining the property’s market value, you can assess the shares’ worth. You’ll likely need to borrow funds, meaning you’ll need a mortgage to buy out your siblings.

Due to the complexities of probate and inheritance in the UK, it’s wise to seek legal and tax advice before buying out your siblings. It’s always better to consult a specialist mortgage broker before starting your application with a mortgage lender.

What do you need to buy a sibling out of an inherited house in the UK?

When you do not have the available funds, you will need a mortgage with which to buy a share of inherited property.

Typically, most mortgage lenders will be looking for your own contribution – by way of a deposit – of at least 5% of the value of the purchase. The bigger your deposit, of course, the more successful you are likely to find any mortgage application.

If you are self-employed, you might find it especially difficult to arrange that mortgage and might want to consult a mortgage broker specialising in such lending – or even a broker who specialises in mortgages for those with poor credit.

The role of a mortgage broker is to secure an agreement in principle for the loan – with subsequent assistance in securing the mortgage to buy out your sibling or siblings of Stamp DutyA tax paid by the buyer when purchasing a property. Land Tax (SDLT) your parent’s home.

Do I have to pay stamp duty when buying out a sibling?

Stamp Duty – Stamp Duty Land Tax (SDLT) to give it its formal name – is not levied on your inheritance of property.

If you go ahead and buy out a sibling, however, then just as with the transfer of equityTransferring ownership of a property from one party to anoth... in any shared ownershipA scheme where a borrower purchases a share of a property an... property you are liable for Stamp Duty on the value of the share you are buying. That is to say, the amount you have paid your sibling for his or her share in the property.

If you buy a sibling’s share but continue to allow them to live in the property, you maintain your alternative place of residence but must declare your ownership of a second homeA property that is purchased as a second home or holiday hom.... As the online listings website Zoopla explains, the purchase of such a second home attracts a 3% surcharge on top of the normal rate of Stamp Duty.

What other fees do I need to consider when getting a mortgage to buy out a sibling?

In addition to any liability to pay Stamp Duty, you also need to keep in mind all the other expenses typically involved in property transactions – valuation fees, legal fees, and mortgage fees, to name but a few.

Once again, therefore, independent legal and tax advice are likely to be well worth your effort.

What happens if siblings cannot agree, and a forced sale is needed?

In certain circumstances, where communications have broken down among siblings and disagreements remain about the sale of any shares, the courts may be asked to adjudicate.

The court will be asked to consider an application for an Order for Sale under the Trusts of Land and Appointment of Trustees Act 1996 and address the issues:

• the intentions of all the parties (defined as trustees under the relevant legislation) – including the siblings – when the property was initially inherited, and the purpose of the trust was defined;
• the welfare of any minor trustees or other minors who occupy the home; and
• the interests of any secured creditors.

Next Steps

Arranging your affairs after a death in the family can be an emotionally fraught time – especially if the property is involved in an inheritance shared with your siblings.

It is typically possible to buy out any share in the property then owned by your siblings, and a mortgage may be available to help you with that transaction.

Perhaps more than in other more straightforward property transactions, however, buying a share of an inherited home can be complicated. At NeedingAdvice.co.uk we will bring our experience and expertise to bear in identifying lenders both on and off the high street, including specialist lenders.

Comprehensive FAQ Guide from a UK Mortgage Broker

Can I buy out my siblings’ shares in an inherited home in the UK?

Yes. You can buy out your siblings’ shares through an inheritance buyout. This typically involves using a traditional mortgage, remortgageRefinancing an existing mortgage with a new mortgage., or capital money such as savings, equityThe difference between the value of the property and the amo..., or funds from credit unions. The first step is to agree on the property’s current market value, ideally through an independent valuation or estate agent appraisal.

Key considerations:

• Secure a fair market valuation through a professional valuer
• Apply for a suitable mortgage product
• Formalise the buyout through a legal agreement, outlining percentage shares and sale proceeds
• Ensure the property title reflects the new ownership

Independent legal advice and mortgage guidance are essential for ensuring the transaction is legally sound and tax-efficient.

What if one sibling refuses to sell an inherited property?

If one sibling refuses to sell and a mutual agreement cannot be reached, the situation may lead to legal disputes. All co-owners generally have equal rights, and non-partitioning co-owners cannot block a property sale indefinitely.

Options include:

• Negotiating a buyout or cash settlement
• Applying for a court-ordered sale under the Trusts of Land and Appointment of Trustees Act (TOLATA)
• Agreeing on a rent arrangement until a future sale is possible

A solicitor experienced in inheritance law can help navigate these complex issues and suggest workable options, including informal solutions or a cleanest compromise.

Do I pay Stamp Duty Land Tax (SDLT) when buying out a sibling?

You do not pay Stamp Duty Land Tax when you inherit property. However, SDLT may be payable if you are buying a sibling’s share in the property. The amount of duty payable depends on several factors, including:

• The monetary consideration involved
• Whether you are a first-time buyer (first-time buyer stamp duty relief may apply)
• Whether you already own property (potential surcharge on top of standard rate)
• Whether the transaction qualifies for exemption due to your relationship or the nature of the property

A fee calculator or advice from a mortgage adviser can help you determine the SDLT payable based on your personal circumstances.

How is the property value determined for a sibling buyout?

A fair valuation is critical. Use formal valuations from independent valuers or estate agents. The valuation should reflect the current market conditions and the specific property type. Casual arrangements or estimates made without professional input can lead to disagreement or unfair outcomes.

You may also consider:

• Objective valuations from multiple sources
• Adjustments for outstanding mortgage balances
• Comparison to recent sale prices of similar properties
• Consideration of ongoing income or rental payments, if applicable

This step is essential to establish a clear buyout agreement or division of ownership.

Can I rent out the inherited property instead of selling?

Yes. If selling is not the preferred option or is delayed due to family dynamics or market conditions, renting the property is a viable solution. It can provide a steady stream of rental income and may allow one sibling to live in the property under a rent arrangement.

Requirements include:

• Notifying your mortgage lender (if the property is mortgaged)
• Meeting legal standards for letting
• Paying income tax on the rental income
• Agreeing a family arrangement or tenancy agreement

You may also need to consider future property use, investment goals, and ongoing maintenance responsibilities.

What happens if a sibling cheated me out of my inheritance?

If you suspect that a sibling has unfairly or unlawfully deprived you of your rightful share of the inherited estate, seek immediate legal advice. Legal remedies may include:

• Contesting the will
• Reviewing the estate plan
• Challenging any informal or casual arrangements
• Reviewing transactions involving the previous owner or capital money exchanged without proper consent

An experienced solicitor can help you determine whether the division of property and any agreement in writing were legally binding and enforceable.

Can I sell my share of the inherited property?

Yes, provided you have a distinct share, usually held under a tenants-in-common arrangement. If ownership is as joint tenants, you must first sever the joint tenancy. You may then:

• Sell your share to a sibling or third party
• Initiate a joint sale and divide the sale proceeds based on your ownership share
• Consider a buyout where you receive your fair share in cash

Legal support is strongly recommended to ensure compliance with property law and to manage tax consequences effectively.

Are there tax consequences for gifting or transferring my share?

Yes. Gifting property or transferring ownership in exchange for money may trigger capital gains tax or inheritance tax. The tax implications depend on:

• The value of the property
• Whether there is an outstanding mortgage
• Whether the gift is made within seven years of the donor’s death
• Whether the transaction is for inheritance planning or estate equalisation

Consult a tax professional or financial planner to understand how to structure the transfer while taking advantage of any tax-free allowance.

How long does a sibling buyout take?

The typical buyout timeline is between 4 and 12 weeks. Factors that affect the process include:

• Probate status (probate must be granted before property is transferred or mortgaged)
• Speed of mortgage approval and formal valuations
• Legal processing and solicitor fees
• Whether there is a mutual agreement or legal dispute

For those requiring a fast, hassle-free option, some turn to property buying companies like Property Rescue, although this may involve accepting below market value.

Can we split an inherited property fairly and efficiently?

Yes, there are several methods to ensure an efficient property split. These include:

• Defining ownership shares clearly in a simple agreement
• Using formal valuations to determine a fair price
• Creating a family agreement to prevent future disputes
• Registering the division of ownership with HM Land Registry

It is essential to consider your long-term plans, such as future purchases, investment goals, or eligibility for first-time buyer benefits, when making these decisions.

Final Guidance: Take Professional Advice and Plan Strategically

Inheritance between siblings often involves legal complexities, emotional dynamics, and significant financial implications. Each situation is unique and requires careful consideration of:

• Individual and personal circumstances
• Capital gains tax or inheritance tax liabilities
• Legal costs and solicitor fees
• Future rental income or property resale value
• Stamp duty purposes and rates

A strategic approach—guided by a mortgage adviser, tax expert, and experienced solicitor—will help ensure that your path to sale, buyout, or long-term ownership is legally secure, tax efficient, and fair for all parties involved.

For many, the cleanest compromise involves structured planning, formal agreements, and clear communication with all parties. Do not rely on informal solutions or assumptions. Engage in proper legal planning and obtain accurate estimates before making any major decisions.