The buy-to-let market has recently been the subject of a raft of tax changes all of which make it a less profitable and less appealing proposition for investors.
In response we’ve seen a dip in demand for buy-to-let mortgages and that’s bad news for many advisers who will now be looking at how they can plug the income gap this creates.
So as we move forward and adapt to a changing landscape, could protection help fill the income gap for advisers? It seems like an obvious choice.
Protection in this area has been undersold. While the BTL mortgage market has become more challenging the need to protect the portfolio and the clients upon whom the landlord relies for income, remains unchanged.
If you have ever watched the TV programme Can’t Pay We’ll Take it Away, then you’ll be very familiar with the life events that can result in non-payment of rent.
This not only impacts the family but can financially cripple the landlord. Having the right protection in place could have prevented some of the tragedies we see unfold on our TV screens.
If you do have clients who are landlords it makes sense to talk to them about encouraging their clients to take out the necessary protection. If they refer them on to you that’s good for your business and theirs.
Crucially, it helps protect families who otherwise will be at risk of financial chaos if they hit a bump in the road. Surely that’s a positive consumer outcome.
But what about the portfolio itself? Some of you will have professional landlords with portfolios of properties. And just like any business, they should consider protecting it.
While these clients may be reluctant to take out protection, asking them the same questions you’d ask any other client will paint a clear picture of what a bump in the road could do to their family’s financial security.
Ask them what provision they’ve made for their business and their families should illness or injury mean an extended absence.
They may answer that they’d simply sell off property but that would impact income, and if they’re unlucky enough to become ill when the economy dips, it may be an unsavoury option anyway.
And what if they die prematurely? Not a nice thing to think about but does anyone in their family have the knowledge and skills to manage the portfolio?
If not, where would the cost of a manager come from and would they even know where to begin looking? The ensuing uncertainty could be costly.
Many protection plans offer additional support such as Royal London’s Helping Hand service. Helping Hand can give a full range of assistance for the family, from bereavement counselling to practical help and guidance.
