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%).
|Plans and solutions for succession planning||Percentage of respondents|
|Converting portfolio to a property development portfolio to attract BPR||54%|
|Family Investment Company||28%|
|Acquiring agricultural properties for Agricultural Relief||26%|