And with a raft of changes in tax and legislation, Jamie Smith-Thompson, managing director of advisory firm Portafina, believes it is difficult to differentiate so clearly between ‘simple’ and ‘complex’ buy-to-let.
He comments: “As a way of providing a side income or an investment, buy-to-let is not as simple as it used to be, due to changes in legislation which have made processes and systems far more complicated for the landlord to navigate."
Louisa Sedgwick, director of sales, mortgages, for Vida Homeloans, agrees, stating she believes all buy-to-let is now no longer ‘mainstream’.
“Since the changes in regulation and the government initiatives in relation to taxation and stamp duty land tax, buy-to-let is no longer a mainstream proposition and should be treated as complex”, she says.
“With further changes coming to the way buy-to-let portfolio cases will be underwritten by lenders from 1 October this year, intermediaries will be responsible for underwriting their landlord clients' circumstances in far more detail than previously, making buy-to-let applications potentially more complex."
Mr Duncombe agrees: “The truth is, most buy-to-let cases tend to have some level of complexity to them.
“As announced in last year’s Summer Budget, mortgage interest tax relief will gradually be cut back to 20 per cent between 2017 and 2021.
“This reduction in tax relief will prove to be quite costly for some landlords. These updates to tax legislation mean customers will now need to decide whether they should buy their property or remortgage in their own name of through a limited company.”
This has made it more complicated for the adviser and even the lender, as Chris Ioannou, senior IFA for Prestige IFA, explains.
He comments: “A higher rate taxpayer, or someone now moving into the higher rate band as a result of the tax changes being introduced certainly does present both the applicant and the adviser with a far lot more to consider and to work through.”
For Martin Reynolds, chief executive of SimplyBiz Mortgages, there is “no solid definition of what ‘complex’ means. He says: “The complexity of a particular customer scenario may relate to the property or properties, the structure of the loan or the customer themselves.
“Complexity is in the eye of the beholder.”
simoney.kyriakou@ft.com
