Consider estate planning professional landlords told

Christine Ross of Handelsbanken Wealth & Asset Management

OVER half of professional landlords with more than ten properties have not done any estate planning for their portfolio, risking tax liabilities for their heirs, a wealth management company with offices in Tunbridge Wells has warned.

Handelsbanken Wealth & Asset Management surveyed 120 professional landlords holding at least four properties, for its SME Landlord Survey Report 2022, and found 52 per cent with ‘large’ portfolios had no succession plan in place.

Lack of forward planning was also a feature of older landlords (aged 45 and older) half of whom had no long-term management plans.

However, while those with larger-scale portfolios are slightly less likely to have considered estate planning, small-scale landlords are overwhelmingly conscious of planning ahead.

Almost all – 96 per cent – of landlords across all age groups with a portfolio of four or five properties said they had long-term succession plans in place, compared to the 52 per cent of landlords with over 10 properties, the survey found.

This suggested those with higher-value estates were less concerned about the tax liability facing the next generation said the report.

However Christine Ross, Client Director at Handelsbanken’s wealth management subsidiary, said: “The success of buy-to-let over the past decade has created huge numbers of wealthy landlords with a real need for dedicated financial and tax planning.

“Property investors with substantial portfolios often defer creating a wealth succession plan, but are prompted into action when considering the alternative – the need for their heirs to sell assets to meet the tax liability on death.”

Succession plans could include converting the property portfolio into a property development portfolio to attract business property relief – the plan for 54 per cent of all landlords surveyed who did have a succession plan.

Meanwhile, 43 per cent were considering a charitable trust – which enables the handover of business to heirs with minimal tax exposure.

Other options considered by this group of forward planners include family trusts (35 per cent), family investment companies (28 per cent) and acquiring agricultural properties to qualify for agricultural relief (26 per cent), said the Handelsbanken report.

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