Planning for the portfolio landlord
The pension, tax and estate questions portfolio buy-to-let landlords face, the signs you see in their mortgage cases, and how the introduction to E&G works.
The pension, tax and estate questions portfolio buy-to-let landlords face, the signs you see in their mortgage cases, and how the introduction to E&G works.
Portfolio landlords are among the clients you know best. By the time you have arranged the third or fourth mortgage, you have seen the whole shape of their finances: the rental income, the loan-to-values, the personal guarantees, the limited company set up to hold the newer purchases. You often hold a clearer picture of their wealth than anyone else they deal with.
What they may lack is a plan for the wealth itself. The equity grows, the portfolio ages, and the pension, the tax structure and the estate sit untouched. You see that gap in their mortgage cases.
A portfolio landlord's wealth is concentrated, illiquid and geared. You see this on every application. Most of their net worth is tied up in property, a good part of it is borrowed against, and very little of it is in a form that produces a pension or spreads risk.
You also see things that may never reach a wealth conversation: the rental profit building up in a company account, the remortgage that released fifty thousand pounds now sitting in cash, the client who has just turned sixty and has no plan for what happens to any of it when they stop. Regulated advice would help in each of those cases, and you see them first.
Some landlords have moved their portfolios into limited companies to manage the way mortgage interest is taxed. You will have arranged much of that lending. Incorporation deals with that and raises other questions that need wealth planning.
A company holding property generates retained profit, a corporation tax bill, and often a director's loan account. It can also make pension contributions as an employer. Check the accounts to see whether the company pays any in. Whether a pension contribution is right, how much to pay and into which pension is advice for E&G to give. You see the company on the application, and the introduction starts there.
Refinancing a portfolio to release capital is routine work for you. What happens to the released capital is a question you cannot answer, and the client may not have asked anyone else.
The money often sits in cash, losing value to inflation, or goes into another property, which adds to the concentration in one asset. A financial planner would look at whether some of that capital should be diversified, held in a pension or invested for the longer term. That is regulated investment advice and it belongs with E&G. Your part is to notice the released equity and offer the introduction.
Portfolio landlords carry a particular kind of risk. Almost everything they own is the same asset, in the same sector, often in the same region, and much of it is borrowed. Interest rates, tax changes and local market shifts affect the whole portfolio at the same time.
Protection is the part you can arrange yourself: cover on the loans and on the landlord's own life sits within your permissions. Protection leaves the concentration in property unchanged. Deciding how to reduce concentration through pensions and investments is E&G's advice to give. You can raise both.
Some portfolio landlords are in their late fifties or older, and you see the dates of birth on every application. Ask whether they have planned what happens to the portfolio when they die or want to step back.
Who inherits the properties, and can they afford to keep or refinance them? What happens to the company shares? How are the mortgages repaid or transferred? These are estate-planning and financial-planning questions. You may be the first professional to notice that these questions are unanswered.
Property is fully exposed to inheritance tax. A geared portfolio carries less exposure while the debt is high, because the borrowing reduces the taxable estate. As landlords age and pay down debt, the estate grows and the exposure grows with it.
There are established ways to plan for this, through company structures, trusts, gifting and life cover written in trust. All of it is regulated or specialist advice, and estate planning sits with E&G. You know the value of the property, the size of the debt and the age of the owner, and together those show the exposure.
You can advise on mortgages and on protection under your own permissions. You must not advise on pensions, investments or estate planning. That regulated advice is provided by Equity & General under its FCA authorisation (No. 474163).
You introduce the client and stay involved. E&G carries the authorisation, the suitability obligation and the documentation. The landlord gets regulated advice, and your own regulatory position stays the same.
When you spot a need, you make a warm introduction to E&G, with the client's consent. E&G picks up the regulated advice, using the facts you already hold. You keep the client relationship, and you see the progress of every introduction through the partner portal.
You share in the value in two ways: in the initial advice income and in the ongoing value of the assets under management E&G builds from your client base. Commercial terms are agreed individually. The value recurs over the years after completion.
These cases arrive in your ordinary mortgage work:
— a new company with retained profit and no pension plan attached.
— six figures of released equity with no destination decided.
— a client reaching fifty-five or sixty with no retirement income beyond rents.
— a capital sum arriving, and a tax and reinvestment question with it.
— a company that could contribute and never has.
— anyone wondering how to pass property on is asking an estate-planning question.
Every portfolio-landlord introduction that leads to advice adds a recurring element to your income, which is the part a buyer can value. A mortgage-only relationship earns at each completion. A relationship that also carries a share of ongoing assets under management builds enterprise value into your firm.
Portfolio landlords hold the kind of complexity that regulated advice is built for. This describes how recurring income is valued. It does not forecast any firm's results.
No. Whether a self-invested pension is suitable, and how commercial property might be held inside one, is regulated pension and investment advice that sits with E&G. What you can do is recognise that the client is asking the question and make a warm introduction. You stay involved throughout, and E&G gives the regulated advice.
No. Whether the portfolio is held personally or through a company, the pension, investment and estate questions are E&G's to answer. A company structure can widen the planning options, because it can make employer pension contributions and there is retained profit to consider. You introduce, and E&G advises.
Yes. The relationship stays yours. You continue to place the client's mortgage business, through E&G on comparable terms or through your own network. E&G advises on the regulated wealth side, and you run the mortgage part of your firm as before.
You share in the initial advice income and in the ongoing value of the assets under management that E&G builds from your introduction. Terms are agreed individually and are not a guarantee of income. The value recurs over time after completion.
Self-employed borrowers with irregular income: the pension, protection and tax gaps the mortgage paperwork shows you, and how the introduction to E&G works.
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The pension, surplus cash, protection and sale-planning gaps you see when arranging a company director's mortgage, and where your permission stops and ours begins.
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The advice a first-time buyer needs over the following decades, from protection now to a pension, a bigger home and an estate, and how the broker who arranged the first mortgage stays involved.
Read itYour firm keeps the mortgage and protection advice. Equity & General gives the pension, investment and estate planning advice, and a named partnership manager sets the arrangement up with you.