According to the Financial Times, there has been a huge shift in the need for a broker during the buy to let process. Compared to 2008-09, where 70% of the market was done through two lenders, there is now much more choice and with this much more information. This calls for more concern and consideration to be taken when making an investment decision which in turn makes in immensely important to get the right broker.
The new rules in tax and stamp duty have meant that landlords have had to become far more careful with their investment choices and getting the right advice is essential. These changes have meant that the buy to let industry has become a specialist market over-night. As these changes continue to evolve, it is becoming more and more apparent that seeking advice is essential in making the best investment through the right means. An example of this could be the best areas to invest in order to receive the best yields. Many people, from 1st time investors to experienced landlords, can often be keen on investing in their local area as they feel that they know the area well so would know the best places to invest. However, the likelihood of your local area being the best area to invest in throughout the UK is slim. Therefore, seeking the advice of a broker could be the difference in receiving double the yield that you would have done in your home area given that they should do all the research and due diligence for you.
Another reason to go through a broker is to ensure that you have the correct advice on the structure that you want to invest in. As of April the Treasury has begun phasing in changes that will eventually see Landlords pay tax on their entire rental income and they will not be able to deduct the cost of mortgage interest. Instead of this they will benefit from a tax credit equal to 20% of the interest cost. It will mean higher-rate taxpayers will pay considerably more and in some cases, will end up paying tax where they haven’t made a profit. However, if a landlord has structures their investments through a limited company they are exempt from this rule and will only pay corporation tax. This again is something that a broker can set up for you and give you all the relevant information on whether this is the best way to approach structuring your portfolio.
Paul Mahoney- Nova Financial is a privately owned and independent property advisory company. We specialise in assisting clients to identify the most suitable property investments for their specific personal situation based upon their goals and preferences.