The Alice in Wonderland Tenants Tax

(Part 2 of a short series on how Landlords are acting for themselves.  See part 1 and part 3).

The problem

Government, this government, is hostile to landlords.

There is no doubt about it. They look back to the ‘golden days’ of Margaret Thatcher when home ownership increased (along with Tory votes) and feel themselves failures because – on their watch – it’s going down.

And who do they blame? Not their own policies. Not the state of the economy. Not even the Labour party and Jeremy Corbin. No, they blame private landlords.

Landlords who selfishly buy up properties, distorting the market for their own personal gain. But it’s not the big business landlords they object to. Nor the overseas investor or offshore trust buying for an investment where the property is left empty.

No, it’s the small landlords who are the enemy, landlords who just have one or two properties who are being clobbered – ordinary people who are investing their hard earned cash in property for their families or retirement.

Taxing landlords out of existence

What then are they doing about this menace against society? The ‘solution’ is to tax them out of existence. If there is an unfavourable way to treat small landlords in the tax regime – they are going to do it:

• Allow landlords to offset mortgage interest against income? Forget it
• Accept that landlords are exempt from paying tax if they make a loss? No chance!
• Give favourable treatment to smaller investors? Absolutely not. In fact quite the reverse.

As you may have guessed, I am talking about the infamous ‘section 24’ – which changes, for landlords, the way that mortgage interest is treated. For most businesses the cost of borrowing is offset against income to reduce their tax bill. But not if you are a small landlord with just a few properties.

The landlords fight back

Landlords (those landlords who are aware of it that is – for many it will come as an unpleasant shock in a few years time) are incensed. And two landlords, Chris Cooper and Steve Bolton, have decided to challenge it.

So they have set up a campaign on CrowdJustice, raised money, and employed a top-notch legal team (including landlord Cherie Blair) to bring a legal action under a process called ‘judicial review’.

I applaud their action but I do have some issues.

Some issues

I was rung up recently – twice actually – by someone on their team. However when they introduced themselves as being from the  ‘tenant’s tax’ challenge,  I naturally assumed that they were a tenants organisation.  Such as Hackney Digs.  So I was a bit surprised and not favourably impressed when it became apparent during the conversation that they were in fact, landlords bringing the challenge against section 24.

Which used to be called the challenge against the ‘Alice in Wonderland’ tax.

I know what they mean – the changes and costs WILL eventually end up being paid for by tenants. However, I’m unhappy about a landlord interest group naming themselves as if they were a tenants’ organisation.  It meant in my case that my first reaction was to have nothing to do with it.

I was also a bit annoyed that they were asking me to publicise their campaign without apparently realising that I had already written about it here.

Still worth supporting though, if you are a landlord …

But let us not be petty – it is fantastic to see the government being challenged on unfair laws. This is part of being in a democratic and fair society.

Whether they will succeed or not, I don’t know. Several people have told me that the challenge has no chance. However, on the other hand, Cherie Blair and her team are not stupid …

Good luck to them anyway. If you want to support the campaign, the page is here.