RE: Landlord tax Changes - Judicial Review Belvoir pledges financial support to fight unfair ta...
RE: Landlord tax Changes – Judicial Review
Belvoir pledges financial support to fight unfair tax changes for private landlords
We are writing to announce Belvoir’s support for a national campaign to challenge what we view as the Government’s discriminatory and unfair tax proposals for private landlords. To support our landlords across the UK we have donated £10,000 to the challenge launched by Cherie Blair’s law firm, Omnia.
You may be aware that during the summer of 2015 George Osborne announced plans for a new tax regime, which targets and penalises private landlords with mortgages. These tax measures will have no impact on the UK’s wealthiest landlords, overseas investors, or limited liability companies that borrow money to fund their BTL property portfolios.
The new tax rules will treat mortgage interest as though it is earned income, which will push many rental property owners into higher tax brackets.
The campaign for a judicial review of Clause 24 of the Finance Act 2015 was launched by two hard working landlords in association, Platinum Property Partners, Property 118, Property Tribes and a number of other companies with close ties to the private rented sector. The aim is to prevent what amounts to discrimination by the Government against those individuals who borrow money in their own names in order to fund their portfolios.
Belvoir fully supports this campaign and has pledged financial support to help fund the barristers and legal experts that will be needed to demand a judicial review of Clause 24. A Crowd funding initiative launched on Boxing Day quickly raised over £50,000 and this money will be used to fund phase two; a court proceeding where a judge reviews the lawfulness of a decision or action taken by a public body – in this case the Conservative Government. Belvoir has pledged money to help fund this challenge against what amounts to an unlawful breach of human rights and/or European law.
You do not have to pledge any money to support this important legal challenge unless you wish to as we have already made a significant donation in support of our landlord clients. We do, however, feel Clause 24 will disallow the perfectly legitimate finance costs (including mortgage interest), of individuals who operate BTL properties in their own name. Institutions, corporations, wealthy cash buyers and overseas landlords will be excluded, thus giving this sector of the market an unfair advantage.
Every single business in the UK is allowed to offset their total costs against their income before tax, but the Summer Budget changed this fundamental and important business principle for landlords. Furthermore it was done without any consultation and the changes within Clause 24 are so intentionally complex that we feel many landlords are unlikely to understand its negative implications on their financial circumstances.
If Clause 24 goes ahead it’s likely that rents will increase, many private landlords may consider selling their properties which will be to the detriment of our tenant clients, and there could be a reluctance to invest in the future. The Government has completely disregarded the vital benefits to society that private landlords provide by investing in and supplying the market with quality rental properties. These strategies will inevitably increase pressure on the private rented sector and of course if demand for properties falls builders will simply stop building, which is exactly what happened in 2008/2009. Unfortunately the Government has made no plans for rehousing those tenants who are likely to lose their homes as a result of an exodus from the market by landlords who are affected by these tax changes.
Belvoir fully supports any actions that will help to prevent unethical, unprofessional and illegal practices by rogue landlords. However, Clause 24 is not a fair or intelligent means of achieving this. Clause 24 will not, as the Government states, only affect “the wealthiest landlords”. In fact, it will not affect the wealthiest landlords at all, because they are the ones most able to invest in BTL properties without the need for mortgage finance and are therefore totally unaffected.
Further information can be found about the campaign for a Judicial Review of Clause 24 by visiting www.crowdjustice.co.uk/case/clause24. You can also follow the campaign on Facebook and Twitter (#clause24). I urge you to get involved in a bid to restore the market back to an even playing field, where private landlords are not unfairly discriminated against. Belvoir is a national company, with 211 offices nationwide, and with the support of our landlords, we hope to influence the Government’s decision-making and prevent further flawed policies from being introduced in the future.