Here are some ways in which mortgage advisers and brokers can work with their clients, lenders and other professionals to help buy-to-let borrowers in even the most complicated circumstances.
Knowing your client
Getting to know your client has to be more than a regulatory catchphrase; it is essential to get the right investment for the right client.
As Jamie-Smith Thompson, managing director at Portafina, explains: "The adviser needs to make sure this is the most suitable investment for the client.
"An initial, transparent conversation with the client, concerning the processes involved, is essential to ensure the client is aware of the implications of the investment journey ahead."
Special purpose vehicles
To get around the various tax changes imposed by Mr Osborne, many landlords and their advisers decided in Spring 2016 to convert their properties into a special purpose vehicle (SPV).
This means landlords can set mortgage interest against income as an expense, and benefit from lower rates of tax paid on corporation tax.
However, switching existing property into a company will result in stamp duty being payable, and a potential capital gains tax liability.
Moreover, chancellor Philip Hammond, threw a spanner into the works in his most recent Budget, by reducing the tax-free dividend income allowance from £5,000 to £2,000 as of April 2018.
This means that as landlords often use dividends to extract income from the company, they could be subject to higher rates of taxation if they breach this new lower limit.
Work with tax professionals
While advisers will need to know about the tax changes and the potential implications for clients, unless they are qualified tax professionals, it will behove them and their clients to talk to professional tax advisers.
This is all the more important when it comes to complex buy-to-let cases, which may require specialist tax advice.
According to Mr Ioannou: "Check clients have SA302 forms (from HMRC) and are completing tax returns. Question any figures that do not appear to be realistic, when compared with the size and profitability of their property portfolios."
He also advocates providing KFIs for a limited company and one for sole/joint names, then referring the client to a trusted accountant.
"This not only helps keep your client's best interests at heart", he explains, "but also may lead to a new networking opportunity and potential referrals from the accountant to you."
