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  • In the Spotlight

    Landlords unite! Support the Judicial Review of Clause 24

    Property Tribes is proud to support a new campaign against Clause 24, which has been instigated by Steve Bolton and Chris Cooper.

    They are co-leading a legal challenge against the Conservative Government via a process known as a “Judicial Review”.

    Judicial Review of Clause 24 (Alice in Wonderland Tax Grab) is aimed at disallowing the perfectly legitimate finance costs (including mortgage interest), of individuals who own and operate buy to let properties in their own name but excludes the same for institutions, corporations, wealthy cash buyers and overseas landlords.

    This Clause

    The Government wishes to continue to tax not just the rental ‘profits’, but will now not allow individual investors to offset the main cost of arriving at that taxable profit, namely the mortgage finance costs.

    What’s at stake

    EVERY single business in the UK is allowed to offset their total costs against their income before being taxed (on their profit). The Summer Budget changes this very fundamental and important business principle.

    However, it only does so in a way that just discriminates against individual buy to let business owner-operators, who have mortgages/finance costs.

    As a result of this change, many thousands of people will find themselves being taxed on loss-making buy-to-let properties, see massive increases in the percentage of tax payable and many will find that they will be pushed upwards into a higher tax bracket, even though they may well not be making a single penny of extra profit!

    We want to bring back a level playing field in the private rented sector to challenge the advantage the government is giving to institutional and corporate investors, overseas property buyers and cash-purchasing landlords, none of whom are affected by Clause 24.

    In the words of Philip Booth, a Professor of Finance, Public Policy and Ethics at St. Mary’s University:

    “To put it quite bluntly, this is an elementary undergraduate public finance error that should not be made in the Treasury.”

    A member of ICAEW commented;

    “It is 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. Clause 24 of the Summer 2015 Finance Bill contravenes that principle and will result in proprietors of property businesses being liable to tax on a fictitious profit – even if the proprietors really make a loss.

    The tax change does not just affect new borrowings. Landlords with existing borrowings will be affected. Portfolio landlords will be particularly badly hit.

    As a consequence of the tax change, major changes in the private sector will take place. Some landlords will pass on their increased tax by increasing rents. Others will be forced to sell, as they will not be in a position to pay the extra tax demanded by HMRC. Homelessness will increase as some tenants will not be able to afford higher rents and many will be evicted by landlords forced to sell”.

    Steve Bolton, who is spear-heading the legal fight on behalf of his 250 strong network of PPP landlords and thousands of other investors, commented:

    “It’s not clear why the Government has chosen to just launch an attack on buy-to-let owner-operators with mortgages. It’s a tax from Alice in Wonderland – truly absurd and divorced from real life. Not only is this tax grab unfair, undemocratic and underhanded, but we believe that it could also be unlawful.”

    The lawyers supporting Steve Bolton and other interested parties believe that there may be a basis in Human Rights and European law where this can be challenged and over-turned via the courts.

    What’s the next step:

    The campaign is seeking a “judicial review”, which is a type of court proceeding where a judge reviews the lawfulness of a decision or action taken by a public body (in this case the Conservative Government).

    Specifically we are challenging Clause 24 of the Finance Bill 2015, which we believe unlawfully breaches human rights and/or European Union law.

    What are the steps and likely timings for a judicial review action?

    Raising £15,000 of funding – as soon as possible

    A “pre-action protocol letter” setting out our case to be sent to the Government in January 2016 (latest);

    An application for judicial review to be filed with the court in February 2016;

    The Government then has 21 days to respond to the application by filing a defence;
    If permission is granted, a 1-3 day hearing would then be scheduled by the court and a decision would be made

    The legal team:

    Mrs Cherie Blair CBE, QC and Sarah Hannett Omnia Strategy LLP.

    If you would like to lend your support to this campaign please visit:

    JUDICIAL REVIEW OF CLAUSE 24 - CAMPAIGN WEBSITE

    Individuals affected by Clause 24 if it results in landlords leaving or not investing further in the private rented sector:

    Landlords
    Lettings agents
    BTL lenders
    Mortgage brokers
    Handymen
    Builders
    Insurance providers
    EPC providers
    Suppliers of products and services to the lettings sector - including digital products such as property management software.
    Accountants
    Furniture providers (HMOs)
    Solicitors
    Tenants

    Vanessa Warwick, Landlord and Co-founder of Property Tribes forum commented:

    “PropertyTribes.com has been at the forefront of engaging landlords on this vital topic. It is clear that Clause 24 has a sinister agenda behind it - to rid the private rented sector of the small landlord and open the way for institutional investment.

    We already have a housing crisis in this country, and small landlords play a vital role in housing the nation, giving tenants a wide choice of properties and locations, and an alternative to social housing.

    If the private landlord is taxed out of existence, then where are all the tenants going to live - because there certainly is not enough provision in the social sector and the U.K.’s record of house building is, quite frankly, farcical!.

    The end result of Clause 24 is a highly contracting PRS, rents on the rise that will be governed by extreme market forces, and tenants with nowhere to go. The burden on local councils will rise massively, and they are already struggling, with record numbers of people being housed in B & Bs. Clause 24 is ill-thought out, inequitable, and additionally crushes the entrepreneurial spirit of people who invested in property as a pension hedge or to create a better financial future for their family. Landlords are net contributors to the economy in so many ways, and we are being punished for providing a much needed service that successive governments have failed to provide through a congruent housebuilding programme.

    PropertyTribes.com fully supports the Judicial Review and will be galvanising our community to get involved. We are pleased that it is being led by two such credible individuals - Steve Bolton and Chris Cooper - as the time has come for all the property tribes and stake-holders to unite and make their voice heard. Supporting this cause is a legal and powerful way to challenge Clause 24 and hold the Government to account.”

    If you would like to lend your support to this campaign please visit:

    JUDICIAL REVIEW OF CLAUSE 24 - CAMPAIGN WEBSITE

    The Summer Budget and Autumn Statement 2015 were leading topics that engaged landlords this year, and featured highly in our Top 30 discussions of 2015.
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    I have made my pledge and urge others to do the same. Now is the time to put your money where your mouth is. Even if it doesn't affect you personally - the Government must be stopped from continually attacking landlords.
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    (26-12-2015 10:19 AM)Linda99 Wrote:  I have made my pledge and urge others to do the same. Now is the time to put your money where your mouth is. Even if it doesn't affect you personally - the Government must be stopped from continually attacking landlords.

    Hi Linda, thank you very much for your support, Chris.

    (26-12-2015 11:29 AM)Michael_Brown Wrote:  I have pledged already, I did say I would do it in the morning but that is not good enough. We must do this TODAY and show our support for the sponsors of this post.
    GIVE TODAY and let's smash the target within 24 hours. Well done to everyone

    Hi Mike - excellent, thank you for your support, Chris.
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    We will be making a pledge as soon as we open in the morning and also making all our landlords aware urgently urging them to do the same
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    [Image: New-logo2.png] Manchester based investor. I buy, sell, renovate and rent investment property in East/North Manchester Wink email: mike@brentwoodinvestments.co.uk Call: 0161 681 3724

    Well done Vanessa,

    I've made my pledge too and prepared to 'unlike' anyone who doesn't!

    Come on all - unite to save your own businesses and your credibility!

    NOW - let's do this!

    Angela
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    Author of The Complete Guide to Property Strategies and The Complete Guide to Property Investing Success
    Learn more at http://www.completepropertysuccess.co.uk

    I also post property updates on my Facebook Page

    "It is the small decisions you and I make every day that shape our destiny" Anthony Robbins

    We may have a lifeline here We all need to grab it and Back it with cash
    I find it shameful that The National Landlords Association and others were not leading the way
    It has proven to me that the NLA are nothing more than a business to make money from Landlords and do very very little for Landlord Rights
    It will be interesting to see how much the NLA RLA pledge to this cause
    But at least we are doing something
    Well done
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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Nearly £6K raised already!

    We should reach the full target by the end of today.

    DONATE NOW!
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    (26-12-2015 11:02 AM)Vanessa Warwick Wrote:  Nearly £6K raised already!

    We should reach the full target by the end of today.

    DONATE NOW!

    I feel so good we are doing something
    and to launch it on Boxing day when Landlords will be looking at news on the internet
    is sheer great marketing it will be great to meet the target today
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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Happy to see this! Back in August, I floated the idea of a legal opinion. And also happy to have pledged too. Let's bring some sanity back to this business!
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