Judicial Review – Landlord Tax Grab

Judicial Review – Landlord Tax Grab

1:00 AM, 26th December 2015, About 8 years ago 280

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Landlord Tax – George Osborne Policy To Face Judicial Review.

Private Buy-to-Let housing providers have chosen Boxing Day 2015 to begin their fight back at Chancellor George Osborne and his discriminatory tax regime, announced in the Summer Budget, which only targets private landlords with mortgages via the Judicial Review process.

New tax rules will treat mortgage interest as though it is earned income and push many rental property owners into higher tax brackets. Knock on effects can also include increased CSA payments and removal of other vital benefits but Osborne’s tax measures will not affect the wealthiest landlords (those with no mortgages), or indeed limited liability companies which borrow money to fund buy-to-let property investment portfolios.

Social Media has been buzzing in recent weeks calling for legal action to be considered.

The first step to instigating a Judicial Review is to obtain a detailed Legal Opinion from specialist legal counsel. Omnia Strategy LLP, established in 2011 by Cherie Blair CBE, QC, has been appointed.

The organisers of the campaign have launched a fund-raising appeal via the Crowd Justice website. Thousands of landlords are expected to donate funds.

Letting Agents and Mortgage Brokers are also being encouraged to contribute to the fund raising campaign. This is because their businesses are likely to be hit too if landlords stop investing or choose to sell up.

A member of ICAEW commented;

It is a long established principle of taxation that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits. Clause 24 of the Summer 2015 Finance Bill contravenes that principle and will result in proprietors of property businesses being liable to tax on a fictitious profit – even if the proprietors really make a loss.

The tax change does not just affect new borrowings. Landlords with existing borrowings will be affected. Portfolio landlords will be particularly badly hit.

As a consequence of the tax change, major changes in the private sector will take place. Some landlords will pass on their increased tax by increasing rents. Others will be forced to sell, as they will not be in a position to pay the extra tax demanded by HMRC. Homelessness will increase as some tenants will not be able to afford higher rents and many will be evicted by landlords forced to sell”.

Mark Alexander, founder of the Property118 Landlords Forum said “it is important for the whole country that funding is raised to win this legal battle. Millions of Britons simply do not qualify for mortgages to be able to purchase a home of their own. The number of people seeking to rent privately has been increasing in line with the growth of the population for decades. It is all very well the government having an ambition for everybody to be a homeowner but they must be made to realise that isn’t realistic. The UK has an ever growing reliance on the Private Rented Sector. Investment and building needs to be encouraged, not taxed into oblivion”

In a letter to the Chancellor, Conservative Lord Flight saidA lot of Buy to Let investment has been an alternative to saving for old age via pension schemes.  Up until World War II investing in rented property was the main method of providing for an income in old age.  Given the poor performance of the Stock Market over the last 20 years, it is hardly surprising that many people have opted for Buy to Let investment as an alternative source of retirement provisioning.  But Buy to Let does not enjoy any of the major tax advantages of pension saving, i.e. tax credit on the amount invested and accumulation of income and capital gains tax free within the pension scheme.  The only Buy to Let “tax advantage” has been the ability of the interest cost to be offset against an individual’s income to determine their tax rates/bill – the very thing which you have attacked.”

When Lord Flight referred to offsetting the interest cost against an individual’s income he of course meant rental income only, not total income.  Buy-to-Let interest is not deducted from any other income that a landlord might have – unlike the way MIRAS used to work.

Nor can Buy-to-Let losses be set off against any other income.  A BTL property has to pay its own way.  If it gives rise to a loss, the owner has to make good the loss out of other taxed income.  Landlords do not receive any tax “breaks”.

BTL has increased housing stock by 2.5 million between 1996 and 2013.

BTL was only responsible for one-twentieth of the 150% price increase between 1996 and 2007, which is insignificant.  Prices would have gone up even more if BTL had not financed the 2.5 million increase in supply – and so would homelessness.

Deducting finance costs from rental income is not a tax relief it is normal accounting practice everywhere, and for every business. That is why Lord Flight put “tax advantage” in inverted commas.

Disallowing finance costs for existing rental businesses is iniquitous and will be damaging for the economy.  Rents will rise.  Tenants who cannot afford the rises will be made homeless, to be put in temporary accommodation in whichever part of the country it can be found, at greater cost.

For these reasons, it is vital for private landlords, tenants and the entire rental sector that this funding campaign is successful.

The window of opportunity to submit an application for Judicial Review closes on 17th February 2016.

The Crowdfunding website page for making donations to the legal action fund can be found via a Google search for “Crowd Justice Judicial Review of Clause 24” or CLICK HERE.

Further information link


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Rayhan Amin

2:33 AM, 19th January 2016, About 8 years ago

Gareth, send me the email please (londonrent@live.com)
Kindly send me this little email please if it helps me with interest relief, i have buy to let properties with mortgages.
thank you


dom glynn

15:41 PM, 19th January 2016, About 8 years ago

Reply to the comment left by "Gareth Wilson" at "17/01/2016 - 15:10":

Hi Gareth,
Just seen this. I also own a Student HMO in Southampton.
Are you referring to something specific to that City?
If so, I'd be really grateful if you could share it with me also?

Demented Landlord

18:46 PM, 20th January 2016, About 8 years ago

Well done Steve, Chris & Mark & thank you

If this does come in I personally will see my portfolio collapse overnight due to the amount of mortgages I have vs rents.

I will not be able to afford to stay in this business any longer and all my tenants will have to find some other mug to house them.

This whole fiasco requires massive publicity to this ticking time bomb before its to late.

Chris Byways

20:05 PM, 20th January 2016, About 8 years ago

1) Demented, why can't you sell 3 out of 4 properties (if you have 75% LTV), and be mortgage free?

2) What will happen to the properties after you get possession? Re-let, sold to FTBers as Osborne seems to think will happen, or put to alternative uses, or redeveloped etc?

These are the questions that concerns tenants and landlords alike if the JR is not successful, in a timely period.

Too few LL and very few tenants, fully realise the adverse effects, and blindly many see it as a good move. Not least Alice.

Rosanne Turvey

23:09 PM, 20th January 2016, About 8 years ago

Reply to the comment left by "Chris Byways" at "20/01/2016 - 20:05":

Yes Chris I think there is a lot of apathy amongst those landlords with only one property. I have tried to spread the word myself about what this new tax is going to do. I am in regular contact with four other landlords with one property who are not interested in signing the petition or in reading anything about this new tax. Another friend also owns a few properties which have no mortgages on them and again he has no interest in signing the petition as whatever happens it does not affect him. I really don't know how we are going to get these landlords to sign the petition.

Gareth Wilson

12:25 PM, 23rd January 2016, About 8 years ago

A further update from Chris & Steve regarding the Judicial Review:

"End of week update on the Judicial Review (please tag and share as widely as possible)...

Today we received the first draft of the letter that is to be sent to government. Our case is clear and solid and once sent, we will issue a more detailed update. We are reviewing the letter over the weekend and plan to have it finalised with the lawyers next week.
Our media campaign is also being prepared for a very big push next week/week after and more and more organisations and supporters are coming on board.

We will be writing an "open letter" and sending this to the national media who are following us closely. This letter will outline our case and our fight, with a view of raising awareness and fostering much more support The more organisations willing to put their name behind our Coalition, the better. Please let us know if you can get organisations who represent landlords, tenants, letting agents and others who benefit from the buy to let market to come on board. We just need names, contact details and the number and type of people they represent. And your help in helping get them on our side and putting them in touch is welcomed.

A new funding campaign will be needed, subject to us being granted "our day in court". We should know this within the next few months.

Thanks to everyone for your support and for spreading our messages far and wide.

Steve and Chris"

Kathy Evans

14:12 PM, 25th January 2016, About 8 years ago

Reply to the comment left by "Arthur Allen" at "20/01/2016 - 23:09":

Ok it's a bit OTT, but:

First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—
Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—
Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.


Why would it hurt them to sign? And who knows what the next step might be ... ?

Demented Landlord

20:09 PM, 25th January 2016, About 8 years ago

Reply to the comment left by "Chris Byways" at "20/01/2016 - 20:05":

Brilliant idea , I just have to sell my property`s at a loss as they haven`t recovered from the last housing crash.

I also may run a business but I do have a conscience,
and evicting 75% of my tenants who have been great and housed for many years does not sound like a good Idea to me.

This fiasco is a government cock up and everyone that is a landlord or a tenant is going to be affected one way or another and that`s the reason I am demented .

I am not here to bicker among ourselves but I am here to fight for what is right.

Chris Byways

23:33 PM, 25th January 2016, About 8 years ago

Reply to the comment left by "Demented Landlord" at "25/01/2016 - 20:09":

Yes, I gave a 'Like' too.

Anyway just think of the CGT you will save 🙁

You say you don't WANT. To evict good tenants. Of course not.

But will they, or you, feel any better if you evict them or if the bank does?

"I will not be able to afford to stay in this business any longer and all my tenants will have to find some other mug to house them."

We all know who WANTS to evict them. Except Alice in his Blunderland.

And not just C24, nor SDLT, but his verbal warfare on those doing the job his Gov and all his Councils can't do - provide more and more homes year on year. At least to now!

I just queried what WILL happen to the properties if Alice is as stubborn as he appears to be?

And to the tenants?

money manager

23:46 PM, 25th January 2016, About 8 years ago

"All change please, all change." Another British tenant (local gov employee) departed and following a six thousand upgrade and renovation relet to an ME post grad at 50% increase. I have become even more a tax collector.

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