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Court rejects plea for judicial review of landlord tax

Appeal-Court-High-Court-Building--700x450.jpgThe High Court has refused permission for a Judicial Review of Section 24 of the Finance Act (No.2 2015), relating to the former Chancellor’s unpopular move to taper back mortgage tax relief for landlords.

Landlords leading the campaign against George Osborne’s changes, which they are calling a “Tenant Tax” have vowed to continue to take their case to the Government, following the Administrative Court’s decision today to not grant permission to proceed to a full judicial review hearing of the legislation.

Cherie Blair CBE, QC of Omnia Strategy LLP, who represented co-claimants Steve Bolton, chairman of Platinum Property Partners, and fellow landlord Chris Cooper, on behalf of the “Axe the Tenant Tax” coalition against HMRC voiced her disappointment.

She says: “The Court’s decision that our clients’ legal challenge should not proceed is very disappointing.

“We know the case has been supported and followed with interest by a large number of individual landlords.

“Many of these landlords now face challenging times ahead.

“From the outset, the legal process was just one aspect of our clients’ fight against this unfair measure.

“Together with their impressive and growing coalition, they will continue to engage with the Government, and the legal team wishes them every success.”

In a joint statement, Bolton and Cooper say: “We are outraged by the Court’s decision today. It has completely missed the opportunity to protect tenants, landlords and the housing market from the disastrous consequences of Section 24.

“From April 2017 the negative impact of this previously failed tax experiment from Ireland, where rents increased by 50 per cent over a three year period, will be felt far and wide.

“Sadly it will be tenants who are hit hardest; they are set to see unprecedented rent increases over the coming months and years, which will be a very clear and direct consequence of this ludicrous legislation.

“For many, it will also mean the loss of their homes because vast numbers of landlords will be forced to exit the market. Hard-working, responsible landlords will have their pension plans in ruins, but the large corporations and the wealthiest in society, who can buy property without the need for mortgage finance, are systematically excluded from this unfair tax policy.

“Now that the legal route has run its course, we will be focussing 100 per centof our attention and resources on taking our case more forcefully, more powerfully and more directly, right to the heart of Government.

“Our goal is simple: to abolish this tax or to remove the retrospective nature of it. “

The Axe the Tenant Tax coalition says it will be launching a range of lobbying, media and grass-roots activism measures over the coming days and weeks.

It will also be encouraging landlords to write to their tenants if they have to increase their rents or sell up, clearly explaining that it is this Conservative tax policy that has forced them into this situation.

Axe the Tenant Tax is a crowd-funded coalition of individuals and organisations that represent more than 150,000 landlords, who in turn provide privately rented accommodation to more than one million tenants.

The legal team at Omnia Strategy LLP argued that Section 24 is unlawful on the basis that the restriction on landlords’ ability to deduct finance costs as a business expense may constitute an unlawful grant of State aid to corporate landlords and owners of commercially let holiday homes and may also breach the European Convention on Human Rights.

National Landlords Association chief executive Richard Lambert adds: “This decision is ultimately disappointing not just for landlords, but for the tenants who will see their rents rise as a consequence of the changes to landlord taxation.

“While we have never been convinced that there was a solid enough legal case to overturn George Osborne’s decision, we hoped the Courts would be prepared at least to listen to the arguments.

“This issue has been the focus of the NLA’s lobbying for the past 15 months and, as the UK’s largest representative body for landlords, we are still committed to changing this damaging policy through political engagement and lobbying. We urge all landlords to join us in this fight.”

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  • Steven Balmer 7th October 2016 at 3:01 pm

    Can anyone explain the justification in exempting corporation and large portfolio holders from this tax- it seems incredibly elitist and a politically disastrous so why grant it?

  • Stuart Duncan 6th October 2016 at 5:51 pm

    I do not have much natural sympathy for property landlords, as I prefer that people bought their own homes and I think that the additional stamp duty levy was a positive contribution to this aim, but I feel that the tax changes are unfair.

    Every business in the land has the right to deduct costs from their income, so I do genuinely believe that there was a legal case to be answered. This is simply an unfair tax and it is effectively double taxing higher rate taxpayers, once on their profits and again on half of their interest payments.

    I would be livid if I was one of the victims.

  • peter david 6th October 2016 at 5:05 pm

    Rents will now HAVE to go up very sharply. This is as certain as night follows day. If people think rent is high now? Oh boy.