Over half of all landlords do not use the services of a tax adviser, a new study from Foundation Home Loans has revealed.

The intermediary-only lender’s research, based on 791 online interviews with landlords, revealed 40% use one in a year once, while another 7% use one even less than once a year.

When asked how they found their tax adviser, Foundation said 42% of landlords indicated they had been recommended one by a friend, colleague or another landlord, although only 3% suggested they had approached an adviser recommended by their mortgage broker.

Foundation suggested the high number of landlords without a tax adviser presented both an opportunity and a risk for mortgage advisers, and implied that mortgage firms should establish introducer arrangements with tax advisers to help clients get the specialist advice they need.

Foundation director of marketing, Jeff Knight, commented: “Having specialist tax advice should, in our opinion, be non-negotiable for landlords before they make any decision about what type of mortgage they need, and how they are going to own and finance their properties going forward.

“Advisory firms clearly have a role to play in this, and it is surprising to see so few landlords saying they chose their tax adviser on the basis of their adviser’s recommendation. An introductory arrangement can work for all concerned – advice firm, tax adviser and client – and should help provide clarity on the tax position, and subsequently, the mortgage advice.

“It is also interesting to hear that large numbers of landlords believe their mortgage costs are destined to rise in 2020, especially when we have such a highly-competitive mortgage market.

“This clearly presents a marketing opportunity for advisers to target those landlords who may be purchasing or refinancing this year, because we might suggest that their clients could be pleasantly surprised by the products and rates on offer to them.”

Foundation’s research also asked landlords to consider the cost of their buy-to-let mortgages over the course of 2020 – with 40% suggesting their mortgage costs would increase, 47% saying they felt they would stay the same, and 13% thinking they would go down.

The lender found that the landlords with bigger portfolios, of more than 20 properties, were more likely to say their mortgage costs would go up.

“Overall, there are clearly large numbers of landlords who are not using advisers to secure their buy-to-let mortgages,” Knight added. “Indeed, if they only go direct, then this might be why they feel their mortgage costs are likely to go up.

“It’s therefore vitally important that advisers put themselves in the shop window, not just for those landlords who would naturally use their services, but the many who seem more inclined not to take advice.”

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