B for Buy-to-let

People often assume that as a debt advisor Buy-to-let (BTL) is something that I couldn’t possible come into contact with. My friends and family are frequently astonished if I mention dealing with this commercial property client or that BTL landlord. Sometimes, however, the clients we help can be a little bit out of the ordinary...

I was introduced to a massive Buy-to-let client based in South Wales who had 30 buy-to-let properties rented out, other commercial properties and a catering business. Initially, I assumed they were unlikely to need my help as their business ventures appeared to be doing well.

After an initial consultation, it emerged they had a huge amount of debt so were placed on a debt management plan with me. However they ended up dropping off the plan because another company told them that they could qualify for an IVA.

The clients actually had £230,000 of unsecured debt, but they had a lot of equity in their properties, so an IVA would not have been a viable solution for them. Whilst they were waiting to see if their IVA was approved they also racked up a further £90,000 worth of debt. I explained to them that an IVA was not suitable for them because they did not qualify and allowed them back on the debt management plan.

I spent ten hours with them going through their profit and loss, paperwork and valuations (the most time I have ever spent with a client – I had to put extra money in the car park twice!). Eventually I realised that the best solution for them was to sell off two of their properties – they had £50–60,000 worth of debt they owed to the Inland Revenue and further VAT debt, so they sold both these properties to pay off these debts.

They have successfully continued on with the debt management plan and are, luckily, still in business now!

What came out of this consultation, for me, was the realisation that, despite clients being told that we always direct them to the most appropriate debt solution, some don’t realise that we really do look at every option. These clients were luckily that we got back in contact with them and they were able to return to a debt management plan, because if the other company had had their way they would have tried to fit them into an IVA – which was entirely unsuitable for their individual situation!