The latest £50,000 target to fund a legal challenge to Chancellor George Osborne’s proposed tax changes for buy to let landlords has been reached - despite the industry’s hiatus over Christmas and the New Year.
Last week we reported that Steve Bolton, whose Platinum Property Partners business has £200m of residential property in its portfolio, is working with fellow landlord Chris Cooper to mount a legal challenge on behalf of around 250 investors in the PPP network, by means of a Judicial Review.
The pair launched their campaign just before Christmas, initially requiring £15,000; this was quickly reached on the CrowdJustice crowdfunding platform. Now another £35,000 is required to enable the pair’s legal team to bolster its case; over the weekend that was reached and exceeded.
The fundraising pitch says: “The Finance Act 2015 includes Clause 24, which overturns a fundamental financial business principle, where INCOME less COSTS equals PROFIT. The current Government sees fit to change this tried, tested and proven commercial formula. In simple terms, the Government believe that it makes complete sense to tax property owners on that part of the rent that has been paid to the lender as mortgage interest, as if that money was still in the property owners’ bank account!”
The pair claim that there are a number of fronts on which Clause 24 is allegedly unlawful and should be challenged:
- Owner-occupiers pay zero Capital Gains Tax when they sell their property, whereas owners of rental accommodation pay between 18 and 28 per cent CGT;
- Owner-occupiers have no regulations or costs associated with fire, gas and electrical safety and certification, licensing and energy performance certificates, whereas owners of rental accommodation have financial and/or legal obligations relating to more than 200 different regulations and laws. Failure to comply can result in imprisonment and substantial financial penalties;
- Many owner-occupiers can buy property with a deposit of just five to 10 per cent and access lower interest rates, compared to 20 to 25 per cent deposits and higher interest rates for buy to let borrowers;
- Owner occupiers can benefit from the ‘rent a room’ tax-free scheme, which is rising from £4,250 a year to £7,500 from April, compared to paying tax on rental profits of between 20 to 45 per cent.
“Those involved with this campaign fully support the elimination of unethical, unprofessional and illegal practices and unscrupulous landlords in the private rented sector. We also welcome fair measures to cool the housing market, so that we avoid the historical ‘boom and bust’ scenario. However, Clause 24 is not the fair or intelligent means of achieving that goal” say the two landlords.