Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Ros ." at "31/01/2016 - 23:14":

Thanks Ros,

This is the most striking media coverage of the Judicial Review yet.

I think George Osborne and the other landlord haters have awoken a monster .

I can see them losing the legal case over clause 24 but I can't see landlords reversing any rent increases after that has happened.

This is because landlords have generally not increased rent in line with inflation until tenants move out and properties are re-let. Landlords are now realising this wasn't necessarily a good business move and their attitudes to life will have hardened as a result of these attacks.

Landlords have been belittled by pretty much everybody in society who isn't a landlord and that has hurt them. The vast majority DO provide a professional service and provide housing to those who are not currently in a position to get mortgages. They are constantly being reminded that they need to be providing a professional service as more and more regulation is heaped upon them. Part of being professional though is charging market rents throughout the tenancy. No business can afford to keep up with the times in every respect but leave its pricing model untouched.
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Having recently joined 118, I am very impressed with the initiatives taken to highlight the best interests of not just the private landlords but also their tenants. In my humble opinion, breaching article 1 of the European Convention on Human Rights and distorting competition are serious issues and should concern all sole traders / small business owners, and not just private landlords and their tenants. It also looks like, the points highlighted by Omnia shows the importance for UK to stay within the EU.

Issued on behalf of CrowdJustice campaign ‘Judicial Review of Clause 24’

GOVERNMENT SET TO BE CHALLENGED IN COURT BY BUY-TO-LET LANDLORDS FIGHTING THE ‘ALICE IN WONDERLAND’ TAX GRAB

A legal campaign to fight punitive tax relief changes for buy-to-let landlords has progressed to the next stage. Two landlords, Steve Bolton and Chris Cooper, are set to challenge the Government in court on behalf of 737 campaign supporters and 250 Platinum Property Partners.

Legal opinion from law firm Omnia Strategy LLP, led by Cherie Blair MBE QC, has confirmed that the campaign has a ‘reasonable chance of success’.

Following a successful fundraising stage, where the target of £50,000 was raised in a matter of days via the Crowd Justice website, the legal team has now issued a Pre-Action Protocol Letter to HMRC. The letter, which has been issued on behalf of co-claimants Steve Bolton and Chris Cooper, calls for a Judicial Review of the Government’s policy change announced in the Summer Budget 2015 which restricts buy-to-let mortgage interest tax relief from April 2017. The Government must respond to the letter by Wednesday 10th February.

The new policy (Section 24 of the Finance Act 2015) will prevent landlords with mortgages from offsetting mortgage interest costs against rental profit before calculating tax, which overturns a fundamental business principle where income less costs equals profit. This will result in some landlords who finance their business with mortgages paying tax despite making no profit on their letting business.

The legal challenge seeks to overturn this ‘Alice in Wonderland’ tax – so-called because of its absurd nature and separation from real life. The challenge has the backing of both private landlords and key industry stakeholders.

The legal challenge is being made against the new policy on the basis that it breaches the European Convention on Human Rights, and it constitutes unlawful grant of State aid to corporate landlords and to the owners of commercially let holiday homes contrary to articles of the Treaty on the Functioning of the European Union.

Despite being introduced with the aim of creating a level playing field in the property market between homeowners and landlords, the policy does not do this. In the most part, homeowners do not generate taxable income from their homes, nor do they pay capital gains tax on the sale of their home. In addition, the Government has decided to exclude the most wealthy property landlords, who are able to make cash-only purchases, as well as institutions, corporations and overseas landlords, and those who own commercially let holiday homes, all of whom are unaffected by the change.

Furthermore, the tax discriminates against landlords with mortgages by making them the only type of business where the cost of funding the capital of their business is not tax allowable, a point made by the Institute of Chartered Accountants of England and Wales. As a result, some landlords will be liable to pay tax on an economic loss and could have effective tax rates of over 100%. There are also likely to be consequences for tenants, such as rent increases, evictions and reduced supply of rental homes.

Steve Bolton commented: “This tax grab is unfair, undemocratic and underhanded, and we believe it is unlawful on a number of points. In no other business are costs wholly incurred to fund the business liable for taxation. In addition there is no substantiation in the Government’s proposal that the changes will create a level playing field between homeowners and buy-to-let landlords. The change discriminates against the typically smaller landlord who may incur effective tax rates of over 100% while making an economic loss, and gives an unfair commercial advantage to many other categories of landlord unaffected by the change. We are therefore delighted that our legal challenge has progressed to the next stage and look forward to receiving the Government’s response.”

For further details of the campaign, please visit the Crowd Justice website: https://www.crowdjustice.co.uk/case/clause24/

Now is the winter of George's discontent...

http://www.totalpolitics.com/blog/456176/tories-rush-to-sell-shares-in-george-osborne.thtml

Please SHARE.

Reply to the comment left by "Gareth Wilson" at "01/02/2016 - 14:51":

Careful Gareth, your education is showing.

Priceless comment David Price 😀

Still ALL on anarchists forum don't get it, same old tired arguments. Still not realising rent increases happening, especially at renewals, and they are upward only revisions......
http://www.housepricecrash.co.uk/forum/index.php?/topic/207774-buy-to-let-investors-to-challenge-tax-hike-in-court-merged-threads/?p=1102875224

Reply to the comment left by "Chris Byways" at "01/02/2016 - 20:39":

Their comments are full of hate for the people who are providing them with a roof over their heads. Most entries are at best incoherent and uneducated, but that it their prerogative.

Reply to the comment left by "David Price" at "01/02/2016 - 21:30":

I'm not so sure they are the beneficiaries of decent PRS housing.... Many do seem to live abroad, or "can't wait to leave this shirty country" (I think that what they said, don't understand much of the language), or are in social housing, but most seem to be reaping (or is that raping) the H2B scheme, "if we put down the minimum 5% and prices drop 50% we can walk away, or move abroad, or if they go up 50% we make a killing", the "40% Gov handout ain't recourse, then oh it is, then oh it's sort of not" (Hyppcritical parasites)

SHelter saying today (DT Business), they are worried these folks will (default) when they face difficulties in five years. 1.75% + RPI + 1%.

And the 20% has put prices up an AVERAGE of £8,250..... Savills say the new scheme will "lead to significant increases"

HPC? Yes - but not yet. Roll on, I might then be tempted to buy another, otherwise I am content to stay as I am, just renovate to still higher quality, and phase out any LHA....