Just over half of professional landlords with 10 or more investment properties have no succession plan in place, risking the future sustainability of their business.

That’s the claim from banking firm Handelsbanken. However, the findings are based on a survey of just 120 professional landlords with at least four properties.

Some 27 per cent of those with no succession plan said they had not had the chance to develop one yet, while 23 per cent admitted it had simply not crossed their minds. Around one in five said that they had no one to leave their portfolio to, while 15 per cent 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: no fewer than 96 per cent 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 per cent with more than 10 properties.

Among all those with a clear succession plan, some 54 per cent plan to convert their portfolio into a property development portfolio to attract business property relief, while 43 per cent 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, family investment companies and acquiring agricultural properties to qualify for agricultural relief.

A spokesperson for Handelsbanken says: “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.”