Inheritance Planning for Property Owners

For decades, property has sat at the heart of family wealth in Britain. A main residence passed down through generations. A holiday home that becomes part of family identity. Buy-to-let portfolios that once delivered dependable income alongside capital growth.

Yet today, the question many families are quietly asking is no longer how do we accumulate property? It is what do we do with what we already own, and how do we pass it on without storing up problems for the next generation?

Inheritance planning has moved sharply up the agenda, driven by legislative uncertainty, rising tax complexity, and a growing awareness that property wealth is fundamentally illiquid. As Rosie Bullard of James Hambro & Partners observes, “inheritance and gifting assets to the next generation is so personal, everyone has different family dynamics” .

The Family Home Is Only the Starting Point

The UK system provides specific reliefs that can allow a main residence to be passed on more efficiently, but modern families rarely own just one property. Holiday homes, buy-to-lets, and overseas properties are now common, each bringing its own planning challenges ^[1].

It is tempting to focus immediately on tax, when to gift, how to use allowances, or how to minimise inheritance tax exposure. But tax alone rarely produces good outcomes. As Rosie puts it, “you shouldn’t let tax be the main driver of your decisions” .

The harder questions are practical. Who inherits what? Can the next generation afford to run the asset? What happens when siblings inherit jointly? And what burden might this create for the generation after them?

A holiday home cherished by one generation can quickly become a financial strain for the next once maintenance costs, council tax surcharges, and differing lifestyles are factored in ^[2].

Illiquidity: Property’s Structural Challenge

Property’s defining feature, its physical permanence, is also its weakness in inheritance planning. Unlike a portfolio, it cannot be divided, rebalanced, or partially sold without consequence ^[3].

This matters when tax liabilities arise. Inheritance or capital gains tax may be due at precisely the moment when cash is hardest to access. As Rosie succinctly notes, “how are you going to pay for that tax exposure in an asset that’s not liquid?” .

Where property is held overseas, the complexity deepens. Different legal systems, succession rules, and forced heirship regimes can override intentions entirely unless carefully planned for. In these cases, wills are not an administrative detail but a central part of preserving family intent.

Buy-to-Let in a New Environment

For landlords, the economics of buy-to-let have changed materially. Restrictions on mortgage interest relief, higher effective tax rates, and increased regulation have reduced net returns and pushed many owners into higher tax brackets.

Within families, ownership can sometimes be restructured to improve efficiency, but such moves are rarely simple. Gifting assets may remove income the original owner still needs, while debt-backed properties raise questions about affordability and mortgage eligibility for the next generation ^[4].

More complex solutions, family investment companies or trusts, bring their own costs. Setup fees, reporting obligations, and ongoing administration all erode returns. As Rosie highlights, these structures only work when families focus on after-tax, after-cost outcomes, not theoretical efficiency .

The Portfolio Question

It is against this backdrop that many long-standing landlords begin to reassess. Not because property has suddenly failed, but because alternatives now offer greater flexibility ^[5].

Selling property and reinvesting into a diversified portfolio allows wealth to be split cleanly, tailored individually, and adjusted over time. Beneficiaries are not forced into joint ownership or shared decision-making. Risk, values, and time horizons can be personalised.

This does not imply that property no longer has a role. Historically, combining property with financial assets provided diversification and resilience. But the balance has shifted, and families are increasingly weighing complexity against flexibility.

Planning Is the Asset

What emerges most clearly is that there is no universal answer. Property is not “dead”, nor are portfolios a panacea. The real risk lies in not planning at all.

Effective inheritance planning today requires more than tax calculations. It demands cash-flow modelling, clear structuring, and honest conversations about family dynamics and expectations. It also requires clarity about what wealth is meant to achieve, income, security, flexibility, or opportunity ^[6].

As Rosie concludes, the work lies not just in choosing assets, but in “lots of financial planning, cash-flow modelling, tax strategies, and then importantly, what are you going to do with that money?” .

For families willing to engage with that process, the future remains far from bleak. With thoughtful planning and a clear understanding of trade-offs, inheritance becomes less about preserving assets, and more about preserving options.