Mortgage intermediaries have been warned to stay clear of buy-to-let tax advice to avoid being involved in the next potential mis-selling scandal.
Speaking in a Specialist Lending Panel at the Financial Service Expo (FSE) London, Louisa Sedgwick from Vida Homeloans outlined the importance attached to brokers having documentation in place to say they had offered no tax advice, as she cited this as the next potential mis-selling scandal.
Also on the panel, Rob Jupp from Brightstar Financial, said: “The important thing is that brokers spend the appropriate time making sure that they never cut corners on buy-to-let transactions. And that appropriate documentation is in place from specialist tax advisers to accept responsibility for the advice they give.”
Adrian Maloney from OneSavings Bank added: “Make sure that your clients are getting the right tax advice and that you, as an adviser, are almost isolating yourself to the mortgage advice. Tax advice should only be done by someone who knows the process inside and out.”
In terms of the wider tax implications the panel agreed that some elements of the landlord community were still getting to grips with how the changes will affect them.
Alan Cleary from Precise Mortgages outlined that professional landlords – and larger portfolio holders – currently possessed a far greater understanding of the tax changes. He said: “We have stats which suggest that around half of amateur landlords don’t know exactly what is going to happen to their profitability as a result of the tax changes.”
David Whittaker from Keystone Property Finance, added: “Lots of landlords remain blind to exactly what is going on, they are aware there is a problem but don’t know how to quantify it yet. And when most of them do their tax returns most of them are going to get a wake-up call.”