More landlords turning to accountants for assistance

New research has suggested that more than half (58%) of landlords are involving accountants when making key property decisions.

Kent Reliance for Intermediaries, carried out the research and said the findings are a clear sign of the increasing professionalisation of the sector.  

As well as those who are already involving accountants, the study showed a further 10% of landlords are considering using an accountant in the future. 

The research revealed that full-time landlords were more likely to have always used an accountant, with three-quarters of full-time landlords currently using one. However, some 29% said they had only just started using one. 

The increasing use of accountants may be in part down to the recent changes to the tax treatment of landlords, with new stamp duty and mortgage interest tax relief rules introduced in recent years. Previous research from Kent Reliance and BVA BDRC in January 2018 found that 19% of landlords had recently set up a limited company in order to offset the changes to tax relief implemented in April 2017. 

While incorporation can help landlords to pay lower taxes on their profits, operating through a limited company requires a higher level of detail in the accounts and, as a result, a broker would always advise the landlord to enlist the help of an accountant. 

The research also found that landlords affected by recent tax changes are more likely to be looking to diversify away from ‘vanilla’ buy-to-let into often higher yielding options such as HMOs, student accommodation or commercial/semi-commercial properties. 

Kent Reliance, which forms part of specialist mortgage provider OneSavings Bank, found that 51% of brokers had been approached by landlords looking to diversify - 56% into HMOs, 14% into commercial property and 9% into mixed-use. 

Once more, these are more complex cases where a landlord would be advised to seek professional guidance from an accountant by their broker to ensure correct paperwork submission and tax calculations.

“This is clear evidence of the growing professionalisation of the sector,” Adrian Moloney, sales director at OneSavings Bank, said. “As portfolio and full-time landlords take more of the market share, we could see the use of professionals like accountants increase further. This is good news for the sector as landlords have the benefit of access to even more advice ahead of key property decisions, particularly on the tax implications.”

He added: “More landlords are making the move into a limited company structure to help offset the effects of recent tax changes. This requires more detailed accounts as well as professional tax advice, the latter, in particular is where the accountant comes in.”  

Moloney said that, whilst brokers play a pivotal role in advising their client, they should not be offering tax advice. “Should a client want to move into a limited company, a broker should advise them to seek the help of an accountant as a first step,” he concluded.