Professional landlords with large portfolios are ignoring estate planning

Most professional landlords with large portfolios (52%) have no succession plan in place, risking the future sustainability of their business for the next generation (1). The findings, from local relationship bank Handelsbanken, also suggest a worrying lack of succession planning among older landlords, with half of those aged 45 or above lacking any long-term management plans.

According to Handelsbanken’s SME Landlord Survey Report 2022, which surveyed 120 professional landlords with at least four properties, more than a quarter (27%) of those with no succession plan said they had not had the chance to develop one yet, while 23% admitted it had simply not crossed their minds. Around one in five (19%) said that they had no one to leave their portfolio to, while 15% stated it is simply not a priority for them – with the same proportion saying the process was just too complicated.

The study shows that landlords with smaller portfolios are far more likely to have taken steps to protect their portfolio from estate tax liabilities: an overwhelming majority (96%) of landlords across all age groups with a portfolio of four or five properties say they have long-term succession plans in place, compared to just 52% with more than 10 properties, suggesting that those with higher value estates are less concerned about the tax liability facing the next generation.

Among all those with a clear succession plan in place, more than half (54%) plan to convert their portfolio into a property development portfolio to attract business property relief, while 43% are considering a charitable trust, which would enable the handover of business to their heirs with minimal tax exposure. Other popular options include family trusts (35%), family investment companies (28%) and acquiring agricultural properties to qualify for agricultural relief (26%).

Christine Ross, Head of Private Office (North) and Client Director at Handelsbanken Wealth and Asset Management, a subsidiary of Handelsbanken, 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. 

“A plan that includes the use of a family investment company or a trust may carry some initial tax cost, but if put in place early enough, has the potential to create far greater savings over the longer term."

To read the full Handelsbanken’s SME Landlord Survey Report 2022, please click on the link below:

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Media enquiries

Patrick Evans /Camilla Wyatt
Citigate Dewe Rogerson
handelsbanken@citigatedewerogerson.com

Notes to Editors

• *Research conducted by PureProfile in June 2022 among 120 UK professional landlords with a minimum of four properties in their portfolio. On average, respondents own 7.5 properties with an estimated total market value of £2.76 million. All landlords questioned have exposure to residential property and 58% have exposure to commercial property

Information on Handelsbanken plc

Handelsbanken is the trading name of Handelsbanken plc, which is incorporated in England and Wales with company number 11305395. Registered office: 3 Thomas More Square, London, E1W 1WY, UK. Handelsbanken plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 806852.

Handelsbanken plc is a wholly-owned subsidiary of Svenska Handelsbanken AB (publ).

Handelsbanken was established in Stockholm in 1871 and in Sweden, it is one of the country’s leading banks with a nationwide branch network. The Bank’s home markets are Sweden, Norway, the Netherlands, and the UK. It also has operations in Luxembourg and the USA.

In the UK, Handelsbanken is a relationship bank with a decentralised way of working, a strong local presence due to a nationwide network of branches, and a long-term approach to customer relations. Handelsbanken specialises in providing personalised and competitive banking services to both businesses, individuals, and property investors, and offers wealth and investment management services through its UK subsidiary Handelsbanken Wealth & Asset Management. Each Handelsbanken branch operates as a small business enabling it to make decisions at a local level and provide a bespoke service. The focus is always on the need of the individual customer and not on the sale of specific products.

For information regarding sustainability at Handelsbanken, please see here: https://www.handelsbanken.co.uk/en/about-us/sustainability.

Information on Handelsbanken Wealth & Asset Management

Handelsbanken Wealth & Asset Management Limited is authorised and regulated by the Financial Conduct Authority (FCA) in the conduct of investment business and is a wholly owned subsidiary of Handelsbanken plc. Tax advice which contains no investment element is not regulated by the FCA.

Handelsbanken Wealth & Asset Management offers a wide range of wealth management services to private clients, charities, and corporate bodies throughout the UK. These services include retirement, pensions, inheritance, and tax planning, as well as investment management. As a wholly-owned subsidiary of Handelsbanken plc, the business also provides wealth management services to the UK customers of Handelsbanken through their network of branches across the UK.

Nothing in this article constitutes advice to undertake a transaction and professional advice should be taken before investing. Past performance should not be seen as a reliable indicator of future results. The value of investments and any income from them can fall and you may get back less than you invested. Tax rates and legislation are subject to change.