HM Revenue & Customs and the Treasury have at last responded to the legal team representing two landlords challenging beleaguered Chancellor George Osborne’s bid to cut buy to let mortgage interest tax relief - but the comments cannot be made public.
LAT readers will have seen in recent weeks the various reports on how landlords Steve Bolton and Chris Cooper are arguing for a judicial review of section 24 of the Finance (No. 2) Act 2015 which includes the proposed restriction of mortgage interest tax relief at a basic rate, even for higher rate-paying landlords.
This follows Osborne’s announcement on the interest tax relief change, initially made back in July. Bolton and Cooper describe the announcement as ending “a long-established principle of taxation that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits”.
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Sounds like the Landlords Association needs to get involved in raising funds to fight this battle.
In the news today is a note that by 2020 there will be 370,000 homes in the council & Housing Association sector will be lost. This gap would normally be filled by private landlords who are now inevitably going to reduce due to the bungling of G O with his attack on the private landlord sector. If the majority of private landlords are owners of portfolios of less than 15 properties there is a good chance the increase in the number of homes being lost could rise even higher. It may well be that G O has shot himself in the foot on this one. Governments are wonderful in that they employ unskilled labour to fill roles in government i.e. ministers without brainpower or knowledge on the subject they are employed in.
I was talking to a major property fund on Tuesday. Directly as a result of our idiotic chancellor's ham-fisted reforms and application of the penal rate of SDLT, the fund has just pulled out of funding a 550 unit PRS scheme
Bank of England likely to get more powers to contain buy-to-let market
On housing, Andrew Tyrie hits out at Osborne and says it is "one of the most congested fiscal areas".
Osborne discusses giving extra powers to Bank of England, he says it is, "highly likely that we will give the Financial Policy Committee powers over Buy to Let".
He references the Bank's fears of a "bubble in this market".
He says: "It is highly likely we will give the FPC powers over the buy-to-let market. It is possible we can do that later this year.
"The measures I have taken in the last couple of fiscal events - on additional stamp duty, on changes to mortgage interest relief - have been done in the knowledge the Bank of England has concerns about a bubble emerging in this market.
"So in that sense, I am not saying there has been any collaboration - because they are entirely independent - but I have informed the Bank's governor in advance of steps I have decided to take in this space, so I think we have a coherent approach to that."
The Chancellor adds that the additional property stamp duty changes announced in the budget were about creating a "level playing field".
FPC will ensure that only large corporates can get hands on BTL properties in the future. He is adamant that he will squeeze all the small independents out of the market to re create a German model.
Easier answer would be to give Independents a window of 2 years to exit the market at 10% CGT.
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