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How brokers are keeping landlord clients profitable in buy-to-let – analysis

  • 16/10/2019
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How brokers are keeping landlord clients profitable in buy-to-let – analysis
With regulatory and tax changes hitting the buy-to-let market it has been reported that landlords have been exiting the market with others saying they plan to follow suit.


Data released earlier this year from Paragon’s PRS Trends Report suggested 49 per cent of landlords would make changes to their portfolio to address an increase in their tax bill with 24 per cent considering selling properties.

So how exactly might brokers manage and advise BTL landlords who wish to exit the market and what other investment opportunities or services can they offer to retain them? 


Favourable conditions 

Contradicting the headlines and statistics, many of the brokers Mortgage Solutions spoke to said they had not had much issue with losing their BTL clients and in fact, were relatively optimistic about the outlook of the market. 

Akhil Mair, managing director of Our Mortgage Broker, said during this environment of low interest rates, unemployment, inflation and mortgage rates, “there are more products and lenders available than ever with lenders and banks offering great and specialist mortgage products”. 

Anthony Rose, director of LDNfinance agreed that although recent tax and stamp duty changes had landlords “reevaluating” their portfolios, “the huge improvements in buy to let pricing over the last 18 months or so has gone a long way to mitigating the impact of a lot of these changes and have kept most landlords’ portfolios operating in a very profitable way”. 

Howard Reuben, owner of HD Consultants, suggested the changes would only affect landlords who were not already firm in their positions, adding: “The savvy and professional landlord really is here to stay.” 

Gary McKenna, mortgage and insurance consultant at Hawke Financial Services said while he had seen a “small number” of landlords slow down and sell properties, retention was not an issue for his firm. 

He went on to say as lenders tried to counteract the changes introduced by the Prudential Regulation Authority by increasing lending, “pound for pound BTL remortgages are sometimes actually better positioned now”. 


Words of encouragement 

HD Consultants’ Reuben says that for him, advising clients to stay in the private rental sector (PRS) or BTL market is “tricky” as his firm has chosen not to be regulated to offer investment advice. 

They do, however, work with investment and tax advisers to help implement appropriate strategies for clients. 

“The most we can do is to highlight the pros and cons of BTL, adding the reason why property investment has historically been such a robust and resilient ‘safe as houses’ strategy and of course the demand for housing is still under-served and a huge growth area for the future too,” he says. 

“Combine that with the low interest rate environment, the numerous tax planning methods to hold property, the succession planning arrangements that can be implemented and the various other aspects to consider, we have still seen more purchases and refinances in our client bank, than people leaving the sector.” 


Exploring all avenues 

LDNfinance’s Rose says he recommends clients get independent tax advice before restructuring or adding to their portfolio.  

He also assists by carrying out an “in-depth analysis” of a landlord’s whole portfolio, so they can consider restructuring the leverage across the portfolio, where advantageous to do so, to allow for the “best possible products being obtained on all properties”.  

He adds that “this may involve increasing or decreasing borrowing on certain properties as necessary”. 

Reuben continues to say that as the main objective from any property investor or landlord is to maximise profit, enjoy a safe regular income and to seek capital growth for the future, “not many other investment products offer all of the above, in the same way a structured and managed property portfolio can”.  


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