Somewhat understandably there is going to be a huge amount of focus on the 30th October Budget announcement and what it means for the buy-to-let sector, landlord borrowers who hold property in their own names, and dare I say it, the private rental sector (PRS) as a whole.

All the news right now is focused firmly and squarely on the potential for the Treasury to raise CGT rates in line with income tax, which for higher-rate taxpaying landlords would mean a significant increase, and no doubt, have a significant impact on the profitability of properties going forward.

There has been some anecdotal evidence to suggest existing landlords are seeking to try and sell properties before the introduction of any CGT increase, and certainly for those who have one or two properties, who may have been seeking to hold onto them until retirement, it’s possible to understand why they might be looking to do this.

At the same time, if – and let’s not forget that nothing has been cast in stone yet – the new Government does decide to raise CGT, then at that point, many existing landlords might well feel there is little point in selling right now.

They may well need to be committed to holding these properties for much longer in order to hopefully benefit from capital growth in the future which would ultimately offset any rise in CGT and still secure them the profit they require.

Some have already called these ‘landlord prisoners’. In a way it muddies the waters even further, after a period when successive Governments have wanted landlords to offload properties to owner-occupiers, they are now in a position where this might not be worth it financially. Perhaps why some are seeking to extricate themselves before any rise is introduced?

It will probably expedite a further ongoing trend of the sector, namely the increasing dominance of portfolio landlords and an increase in the number of corporate entities who are active in this space.

As we know, if you own property in a business you do not pay CGT when you sell it, and it’s perhaps another reason why we have seen a dominance of limited company buy-to-let in recent years, and why this is only going to increase further.

We’ve often looked at the pros and cons of owning property in a company, plus the pros and cons of moving property owned as an individual into a company. Up until now, what has tended to put people off doing this is it is treated as a sale, and therefore comes with a stamp duty payment requirement.

However, even with this cost, if the CGT rise does come in, might we see more landlords willing – or having to – accept the stamp duty price to pay in order to get their properties into a limited company and therefore exempt from CGT?

As advisers of landlord borrowers, one suspects these are the conversations that are going to need to be had now and post-Budget if that CGT rise is introduced. If the landlord is going to be holding onto that property for a lengthy period of time, then they may feel ‘sucking up’ the stamp duty costs is something they would be willing to do in order to have their portfolio exempt from CGT.

At the same time, for those who still think this is too much to bear in terms of ‘dead money’ they would need to find, their time horizon for holding onto their properties might well have been pushed out. Those who might have thought they would sell up in the next year or two, might now be looking much further into the future, and therefore will be ripe for remortgage advice.

And, at the same time, might they be looking to extricate equity from those properties now via a remortgage, rather than what they had planned to do, extract equity via a sale. If they have the headroom to do so, and they can continue to afford the mortgage payments while also meeting the rental coverage, then this might be an option for individual landlord borrowers.

For those ‘accidental landlords’ who are now seeking your advice to borrow as individuals, perhaps through a specialist lender like Foundation for a consumer buy-to-let, these potential CGT changes can facilitate a discussion about their long-term plans and the mortgage choices available to them later down the road – further adding value to professional advice.

Overall, and this has been something we have said many times in recent years, it remains a complex picture for all buy-to-let landlords, and therefore the opportunity to provide real clarity and understanding, and to deliver the necessary solutions, is there for the taking when it comes to advisers.

Now is the time to highlight to all landlord clients what is potentially coming over the horizon, how you see it, how you can help, and what their options are. I suspect you will be pushing at an open door.

Grant Hendry is director of sales at Foundation Home Loans