It has never been more crucial for mortgage advisers to be a central point of contact for buy-to-let landlords
Buy-to-let borrowing is buckling. Following the whirlwind of changes that have blown across the market in the past year, borrowing in this area fell 26 per cent on an annual basis in February.
The shape of the buy-to-let market is also changing. Some lenders are specialising in business buy-to-let, landlords with property portfolios or those with properties owned by a limited company. On the other hand, others are only focusing on smaller, private landlords.
In light of all of this, advisers are having to quickly adopt a new, more bespoke approach when speaking with landlords. They must understand how the changes will affect all different types. Ensuring the client’s background and objectives are understood is standard practice for most. However, this is no longer enough.
In most cases, specialist business and tax advice is required. If you do not have a relationship with an accountant, now is the time to find one. Most accountants will be getting enquiries from landlords but will not know anything about which lenders offer different buy-to-let mortgages that alter their tax affairs.
We are also seeing a rise in demand for limited company loans from landlords. A limited company may be a more tax efficient way of owning buy-to-let properties but it is crucial the customer seeks advice from their accountant. They will be able to advise on the most appropriate business structure and offer guidance on the financial implications of their choice, including any tax liability.
Finally, brokers would benefit from using lenders that allow top slicing of income, which may help clients achieve the loan-to-value they need. It is also important to consider the length of fixed rate deals to see if they help too.
These are challenging times for all who are reliant on the buy-to-let market. Mortgage advisers must continue to be the key point of contact for landlords and set up new relationships if they are to facilitate sensible borrowing this year.
Toni Smith is sales operations director at First Complete and Pink