The High Court has refused permission for a judicial review relating to the former chancellor’s unpopular move to taper back mortgage tax relief for landlords.
Under plans set out by George Osborne in July 2015, buy-to-let tax relief will be gradually reduced to the basic rate of tax.
The change will come in from next April, and will prevent landlords from offsetting mortgage interest costs against rental profit before calculating tax.
Landlords leading the campaign against the former chancellor’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 was representing co-claimants Steve Bolton, chairman of Platinum Property Partners, and fellow landlord Chris Cooper, on behalf of the “Axe the Tenant Tax” coalition against HM Revenue & Customs.
Blair, who is a QC at Omnia Strategy, 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.
“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. 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.”
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 explainin 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 Section 24 of the Finance Act (No.2 2015) is unlawful on the basis that restricting 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.
“We are still committed to changing this damaging policy through political engagement and lobbying. We urge all landlords to join us in this fight.”