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Landlords lose High Court battle to overturn ‘Tenant Tax’

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  • 06/10/2016
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Landlords lose High Court battle to overturn ‘Tenant Tax’
Private landlords battling against the so-called 'Tenant Tax', which disallows the deduction of mortgage costs from rental income, have lost their fight after being denied permission for a full hearing.

Led by Cherie Blair QC, co-claimants Steve Bolton and Chris Cooper took their case to the High Court in London today, to argue that they should be granted a judicial review of the law.

Speaking outside the court, following the decision not to grant permission for the case to proceed any further, Blair said ‘landlords face challenging times ahead’.

“The court’s decision that our clients’ legal challenge should not proceed is very disappointing,” said Blair. “Steve and Chris, and many others, have dedicated a lot of time and energy into putting forward the best case possible. We know the case has been supported and followed with interest by a large number of individual landlords.”

The landlords have vowed to continue their battle against the ‘Tenant Tax’, as its is known, laid out in section 24 of the Finance Bill 2015. Their argument accuses the government of providing unlawful state aid to corporate landlords because they are permitted to deduct mortgage interest payments from their rental income. Individual landlords, who cannot deduct the cost, will consequently be taxed on their turnover and not profit. The pair also believe this could be viewed as a breach of human rights.

In a joint statement, Bolton and Cooper said: “We are outraged by the court’s decision today. 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% 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 landlords’ next step is to launch a range of lobbying, media and grass-roots activism measures which will include asking landlords to write to tenants if rents have to be increased informing then the government has forced them to take this action.

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