Ian Boden

What lies ahead for the buy-to-let landlord?

A new year is a good time to reflect on what lessons should be taken from the previous 12 months, and to get an idea of what may be in store in the year to come.

For landlords, it’s been a similar story for some time now, that of seemingly never-ending change.

It’s no secret that one result of the various tax changes surrounding buy-to-let has been that more landlords are now opting to add to their portfolio by purchasing through limited companies, rather than owning the properties in their own name.

While this has led to a growth in dual-form landlords — those who end up owning investment properties in both their name and that of their company — it has also served to encourage more lenders to enter the market and provide these forms of funding.

As landlords continue to see the impact of the income tax changes on the profitability of their investments, we are likely to see more of them shift over to focus new purchases through limited companies, as well as switching existing portfolio properties over to company ownership.

This presents its own challenges for brokers. Different lenders will have different requirements for these sorts of deals, which intermediaries will need to keep on top of, while there is also the requirement to ensure that your clients receive the appropriate tax advice. 

This isn’t an area that brokers should attempt to tackle alone.

No end to the changes

Just as recent years have seen a host of changing rules and requirements for landlords to grapple with, 2020 will be no exception, with yet more adjustments on the way.

For example, rules covering the minimum energy efficiency standards of rental properties will be extended to include existing tenancies as well as new ones from April, while the government has vowed to scrap section 21 — so-called ‘no-fault’ evictions — as well.

And, of course, 2020 marks the end of the phased changes to tax relief on mortgage interest payments

It’s landlords that have been adaptable to change, who have been nimble enough to adjust their approach, that have flourished over the past couple of years, flying in the face of those naysayers who proclaim the market is finished.

This will continue to be the case, not just in 2020, but for the foreseeable future.

Building the right team

An important lesson that we took from 2019 is just how crucial it is to get the back office team right.

We were incredibly proud to be named the buy-to let lender of the year by the National Association of Commercial Finance Brokers (NACFB), and have no doubt that the investment we have made in developing our buy-to-let team has made a substantial difference to the satisfaction provided to borrowers and advisers alike.

From expanding our lending operations team to bringing in a new director of underwriting, it’s vital that brokers have a team they can rely on, which they can speak to about queries and issues as and when they arise, and which can provide them with everything they need to complete the case.

Landlords are increasingly professionals rather than part-time investors and, as such, they know that there is far more to a lender than simply delivering a competitive rate — they have exacting standards.

It’s up to lenders to raise their game to meet those expectations.

Leave a comment