The Residential Landlords Association (RLA) is seeking legal advice on whether to challenge Chancellor George Osborne’s proposed tax changes for landlords.
In the summer Budget last year, Osborne announced plans to cut mortgage interest tax relief for buy-to-let investors.
The change will mean that landlords will be taxed on turnover, not profit, and targets smaller investors.
RLA Seeks Legal Advice on Challenging Osborne’s Tax Changes for Landlords
The RLA is taking advice on whether the change will breach the Human Rights Act and EU law on free movement of capital.
Separately, two landlords have crowdfunded to fund a judicial review. Read more: /angry-landlords-hope-to-tackle-george-osborne/
The RLA also believes that the Government’s policies are encouraging overseas property investors.
The additional 3% Stamp Duty charge for buy-to-let landlords and second homebuyers, announced in the Autumn Statement, will, similarly to the change on mortgage interest tax relief, be imposed on smaller landlords.
Landlords with smaller portfolios will be subject to the extra tax, while those buying 15 or more properties in one transaction will be exempt.
The RLA says that this will favour larger investors, “many of whom are likely to be from overseas”.
The Chairman of the RLA, Alan Ward, comments: “It is astonishing that a Conservative Chancellor is leaving the way open for foreign investors and cutting opportunities for individual UK landlords.
“This additional assault on private landlords coming on top of changes to the taxation of rental income will only lead to reduced supply and higher rents.”
He continues: “The Chancellor’s planned changes to Stamp Duty came as a bolt out of the blue. Regardless of the Government’s plans for homeownership, demand for rented housing is only set to increase.
“The Government needs to understand that not everyone will be able to afford to buy a house or indeed want to, even if more houses are built. Its whole policy towards the private rented sector needs to change. If it does not, it will only make the housing crisis worse.”1
The Chair of the Treasury Select Committee asked the Chancellor yesterday whether the Stamp Duty charge would aid or hinder mobility in the jobs market.
Osborne responded: “I think that it will help to promote homeownership, because it will mean that there is a more level playing field between an owner-occupier who wants to buy a house, a first time buying family and a buy-to-let landlord.
“There is nothing wrong with people investing in property, but there should be a level playing field so that we reverse the decline in homeownership in our country.”2