Insight and events

While the mortgage market, and the wider UK housing sector as a whole, has been seriously impacted by COVID-19, professional landlords are not standing idle. Many are taking advantage of the pause in purchase or remortgage activity to re-evaluate their investments, in order to maximise opportunities when normality returns.  

This includes company ownership arrangements supported by appropriate mortgage funding, but just as important is ensuring that buy to let landlords are seeking the right professional advice. 

As professional networks become increasingly important for brokers, obtaining holistic guidance covering all elements of both the mortgage and remortgage process is now more vital than ever.

We examine how this guidance  has changed with the evolving mortgage landscape, what landlords should be aware of if they’re thinking of incorporating, and what smaller broker firms need to consider when building networks.

Why guidance is crucial

• The raft of regulatory changes means buy to let mortgage options are increasingly complex (with top slicing and lower rate assessed rental requirements becoming key parts of the market).
• While there’s a need for personal name and limited company options, professional advice is currently at the highest demand seen.
• Brokers should work with intermediary partners to keep up to date with product changes or announcements. 
• Brokers are qualified to offer expert advice on mortgages but as part of their client service, they should also be able to call upon their established professional network and share details of a reliable tax adviser or solicitor to provide any legal and tax advice. However, you should be sure that your contacts are suitably qualified and reliable. If your landlord clients face any issues from HMRC further down the line, it could have ramifications on you, especially if advice was sought based on your recommendation.
• It’s not recommended to obtain tax advice from accountants, without first asking if they’re qualified to give such advice

What do landlords need to be aware of when incorporating?

• It’s important that clients are aware of the potential additional costs involved when incorporating, such as ERCs on existing mortgages, and the full tax implications involved in the sale, including stamp duty and capital gains tax.  
• All landlords need good tax advice before purchasing. Brokers can steer them to good firms if they don’t have someone they trust.
• Brokers can inform on mortgage options available in both personal and limited company names, which tax advisers can use to work out and advise on the most beneficial option.

Advice from both professionals is key to a landlord’s decision on whether to incorporate or not.

Building a successful network

Brokers should meet with a variety of different firms and advisers before making a decision. The following questions should act as a guide to suitability:

• Where do they fit into the client journey?
• To what extent do they specialise in property tax advice?
• Have you checked that they’re fully qualified?
• What scale could they cope with?
• How do they typically engage with clients?
• Are they a good cultural fit?
• Ultimately, do you trust them to offer your clients good advice?

How do advice networks work in practice?

• Advice from tax advisers or solicitors should be available at any stage of the journey, and brokers can facilitate this by either arranging for them to contact the client directly, or passing contact details to the client.
• Relationships should be seen more as a partnership, and tax advisers should meet with brokers to ensure they are up to date with current trends.
• Make sure boundaries are clear: brokers should not be giving tax advice, and any queries must be passed to the adviser.
• Sharing market updates and base knowledge is important for all parties to work together. Consider presenting to landlords, estate agent partners and tax advisers in one meeting so different experts can get together in one room and find the information they need first hand.

Communication is key

• Reiterate, in writing, to your buy to let landlords telling them that they should seek professional tax advice, and you can refer them if needed.
• Confirm with your clients that there are personal name and limited company options available, and they should seek advice before you can advise on mortgages for either option.
• You should show your understanding and knowledge of the buy to let market by having processes in place to assist your clients.

Three top tips for growing your network

1. Does your website highlight your digital high street presence and inform and educate any new landlord to your areas of expertise?  Does it adequately demonstrate your ability to help them and make sure you stand out head and shoulders above any other broker?

2. Education, education, education. Kent Reliance for Intermediaries will be running bespoke educational webinars hosted by Roger Morris, Group Distribution Director so make sure you invest in yourself and your business to become the best you can be. Keep an eye out for exclusive VIP access!

3. For an in-depth look at the key considerations for buy to let landlords, download our latest guide, ‘Changes to UK tax relief on finance costs’. As you delve into the contents and make the connections with your existing business activity, keep it handy for referral as it highlights key areas you should be really comfortable with and understand.

Useful links

• For an insiders’ view, Adrian Moloney, Group Sales Director, sat down for a chat with Greg Cunnington, Director of Lending Relationships and New Homes at Alexander Hall, to get the full rundown of how strong professional relationships can benefit your business and the services you provide. Read the full list of questions here.

• Download our latest guide, ‘Changes to UK tax relief on finance costs’.
• View our current residential and buy to let product ranges.

Who to contact

In these uncertain times, you need the experience of a specialist lender more than ever.

If you’re ready to get started, email our broker liaison team. Alternatively, if you require any further information on your cases, find your nearest BDM, who’ll be happy to answer any questions you may have.

Between you, your BDM and our expert underwriters, we have the formula to help you with your next “odd” case.