More than half of landlords snub tax advice – Foundation

  • 27/02/2020
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More than half of landlords snub tax advice – Foundation
Over half of landlords responding to a survey by Foundation Home Loans said they did not use the services of a tax adviser.


Some 40 per cent said they used a tax adviser at lease once year, while seven per cent used one less than this.

Foundation said the online survey of 791 landlords, carried out by BVA BDRC highlighting the high number of landlords without a tax adviser, presented an opportunity and a risk for mortgage advisers.

Mortgage firms, said Foundation, should establish introducer arrangements with tax advisers to help clients get specialist advice. Without tax advice, advisers could recommended unsuitable mortgage products to landlords who did not know the full extent of their own tax situation and what options would be best for them.

Jeff Knight, director of marketing at Foundation Home Loans, said: “Having specialist tax advice should, in our opinion, be a non-negotiable for landlords before they make any decision about what type of mortgage they need, and how they are going to own and finance their properties going forward.

“Advisory firms clearly have a role to play in this and, it is surprising to see so few landlords saying they chose their tax adviser on the basis of their adviser’s recommendation. An introductory arrangement can work for all concerned; advice firm, tax adviser and client and should help provide clarity on the tax position and, subsequently, the mortgage advice.”


Tax advisers recommended by friends

When asked how they found their tax adviser, 42 per cent said they had been recommended one by a friend or colleague or another landlord. However only three per cent said they had taken their business to an adviser recommended by their mortgage broker.

The survey also asked landlords to consider the cost of their buy-to-let mortgages over the duration of 2020. Some 40 per cent felt their mortgage costs would increase, 47 per cent said they felt they would stay the same, while 13 per cent said they thought they would go down.

Those landlords with bigger property portfolios of 20 or more properties, were more likely to say their mortgage costs would go up.


Quarter of landlords go direct to lender

The research highlighted that more than a third of landlords said they had not arranged their last buy-to-let mortgage through a mortgage adviser, with nearly a quarter preferring to go direct to the lender.

Foundation’s research did, however, suggest that those landlords with bigger portfolios were more likely to use an adviser for their purchases, with over 70 per cent of portfolio landlords using their services.

And while 30 per cent of landlords said they plan to remortgage at least one of their properties over the next 12 months, 61 per cent of those said they would expect to use an adviser, 23 per cent would go direct to a lender.

Of those landlords who said they would be adding to their portfolios over the next 12 months, 55 per cent said they would do so through a limited company vehicle and 30 per cent would buy as an individual.

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