Currently, buy-to-let landlords can deduct
their finance costs, including mortgage interest, from their rental
profits before calculating their taxable income.
This has the effect of reducing the amount of income tax
landlords have to pay.
However, in the July 2015 Budget, then chancellor George Osborne
announced that the government would restrict the relief on finance
costs to which individual landlords of residential property are
entitled, to the basic rate of income tax (20%). The new
restriction was passed as part of the Finance Act 2015 and will be
phased in over four years, starting from April this year.
The effect of these changes will result in an increase in the
tax liability for many landlords, particularly those with highly
leveraged properties. For basic rate taxpayers, the increased
taxable rental income may move them into the higher rates of
'Critical rental shortage'
An increase in taxable income could also reduce their personal
allowance and, for those whose income exceeds £150,000,
restrict the amount on which they can claim tax relief on pension
A report recently released by the RICS claims there is a
"critical rental shortage" and that at least 1.8 million
more households will be looking to rent rather than buy a home by
2025. Some would argue that this suggests Osborne's decision to
introduce mortgage interest relief changes was somewhat
short-sighted, although the government has since announced a
£5bn plan to address the country's housing shortage.
Unsurprisingly, the government's proposed changes were met
with fierce resistance by many landlords, not least by a group
known as Axe the Tenant Tax.
The group, represented by Cherie Booth QC, claims that the
policy discriminates against small-scale buy-to-let investors as it
denies them the same rights as other businesses operating in the
same sector. On 6 October 2016, Axe the Tenant Tax lost a
permission hearing at the High Court and is not permitted to
proceed with its judicial review claim to halt the change.
Although the group could appeal the decision, recent reports
suggest it is unlikely it will pursue the legal route, preferring
to take its case to the government through lobbying, media and
This article was first published in Property Week on 20 January
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Technology and Construction Court (TCC) decided that the costs of claims consultants assisting in adjudication enforcement proceedings can be recovered as disbursements, assuming that those consultants acted in the adjudication.
The requirements of a valid payment notice issued under a construction contract were considered in a previous update: "A Payment Notice? Be Clear?" with reference to the case of Surrey and Sussex Healthcare NHS Trust v Logan Construction (South East) Ltd  ("Surrey and Sussex") a decision of the English High Court.
VL's appeal was against a decision by LBC on a review of an earlier refusal to provide VL and her family with housing on the grounds that she was not homeless, or threatened with homelessness, finding she had accommodation available to her in Portugal.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).