There will be a hearing around the end of the month to determine whether or not there will be a judicial review of the move to reduce the tax relief from 2017 to 2020 until it meets the basic tax rate.
Landlords and organisations have warned it could put off new landlords coming into the private rent sector and also hit existing landlords who will have little choice but to pass on the extra cost to their tenants in the form of higher rents.
Landlord campaigners Steve Bolton and Chris Cooper said that they also have a meeting with the new housing minister Gavin Barwell on 09 September when the issue will be discussed.
‘We will obviously be raising our serious concerns about the impact, making him aware of our legal challenge and doing the best job we can to help him become a supporter of our cause within Government,’ they said.
It is not the only tax change landlords have faced recently. Earlier this year a new 3% extra stamp duty was levied on the purchase of additional properties which included buy to let investments.
The Scottish Association of Landlords (SAL) and the Residential Landlords Association (RLA) have both warned that these tax changes threaten to increase costs, making it easier for irresponsible landlords to provide sub-standard housing to tenants and threaten housing supply for those who believe renting is the most suitable option for them.
The Scottish Association of Landlords (SAL), along with the Residential Landlords Association (RLA) south of the border, have launched a joint campaign to convince the new Chancellor of the Exchequer to reverse or amend tax changes in his Autumn Statement expected later this the year.
They pointed out that a recent YouGov survey for the Council of Mortgage Lenders suggested that 34% of landlords will reduce their investment in the private rented sector as a consequence of these tax changes.
Alongside this, the Scottish Government has introduced a 3% levy on the Land and Buildings Transaction Tax (LBTT) for those buying additional properties, including properties to rent out.
‘We know from our regular branch meetings around Scotland that landlords are already seeing increased costs as a result of tax changes. As well as impacting on individual landlords, we are concerned this could make it harder to tackle the current housing crisis by making it more difficult to attract much needed investment,’ said John Blackwood, SAL chief executive.
‘With the uncertain investment environment that has been created by the Brexit vote, at least in the short term, the last thing anyone in the housing sector needs is tax rises which will only make things worse,’ he explained.
‘Furthermore, we are concerned that if costs increase, this could open the door for rogue landlords who don’t follow the rules on either tax or safety and quality standards at a time when real progress is being made at driving these unscrupulous players out of the market,’ he added.
Lettings group Belvoir, believes that the changes are likely to continue deterring landlords from further investment in the rental market which will restrict the supply of available rental properties and result in rental increases.
‘Gavin Barwell, the new Housing Minister, takes swift action to unpick the disastrous tax policies that were introduced by the previous Chancellor George Osborne. We believe that the government should be taking steps to incentivise private landlords to invest in Buy to Let properties, as this is what will bring rents down,’ said Belvoir managing director, Dorian Gonsalves.
‘If the government wants to make housing more affordable the only way to do this is to increase the supply of properties on the market. It is completely counter intuitive to restrict supply with tax changes and then not expect rents to rise,’ he pointed out.
‘Gavin Barwell has an opportunity reverse the situation and create an environment where there is an oversupply of rental properties. This can only be achieved by incentivising landlords and making the rental market more affordable for tenants,’ he added.
