Over half of all landlords do not use the services of a tax advisor

In the modern buy-to-let market, its vital for landlords to seek specialist tax advice before making any decisions about what type of mortgage they need and how they are going to own/finance their properties going forward. Intermediary firms clearly have a huge role to play in this process, although it appears that many landlords continue to ignore the tax expertise on offer.

The latest landlord research from Foundation Home Loans revealed that over half of all landlords do not use the services of a tax advisor, while 40% use one at least once a year, and 7% use one less than this. When asked how they found their tax advisor, 42% said they had been recommended one by a friend or colleague or another landlord. However, only 3% said they had taken their business to an advisor recommended by their mortgage broker.

The research also highlighted the further opportunity for advisory firms with more than a third of landlords saying they had not arranged their last buy-to-let mortgage through a mortgage advisor, with nearly a quarter preferring to go direct to the lender (24%). Our research did however suggest that those landlords with bigger portfolios were more likely to use an advisor for their purchases, with over 70% of portfolio landlords using their services. And while 30% of landlords said they plan to remortgage at least one of their properties over the next 12 months, 61% of those said they would expect to use an advisor, 23% would go direct to a lender.

The high number of landlords without a tax advisor presents both an opportunity and a risk for mortgage advisors, suggesting that mortgage firms should establish introducer arrangements with tax advisors to help their clients access the specialist advice they need.

It’s surprising to see so few landlords saying they chose their tax advisor on the basis of their advisor’s recommendation. An introductory arrangement can work for all concerned – the advice firm, the tax advisor and the client. It should also help provide clarity on the tax position and, subsequently, the mortgage advice.

We, as an industry, must continue to bang the drum about the need for, and the benefits of, specialist advice – especially to a landlord demographic who could gain a lot from access to specialist products. In any complex market, the value of advice is rising, and none more so than for landlords in what remains a challenging tax and regulatory climate.

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