Lord Flight, Kriss Akabusi and Cherie Blair added their attendance to the 600 landlords and letting agents at the so-called Tenant Tax Summit in London yesterday.
The event’s aim was to raise awareness of their campaign to get a judicial review to abolish Section 24 of the Finance Act 2015, which removes the mortgage interest tax relief that landlords have enjoyed to date.
Organisers Steve Bolton and Chris Cooper, who are landlords and the co-claimants in the legal case, say that the removal of mortgage interest tax relief is unfair on “amateur landlords” and is an indirect tax on tenants.
EYE spoke with Steve Bolton who is the founder of private property investment company PlatinumProperties.
“Today is about fighting, about axing the Tenant Tax,” he said.
He pointed out that a week ago they had “250 people confirmed” and “by lunchtime today there are 600 people here” as an example of “the depth of feeling of how wrong this is”.
When asked to explain why this is wrong he said: “Section 24 overturns generally accepted accounting principles – if landlords have to count their finance costs as income it’ll push a lot of landlords that don’t realise it into a higher tax bracket.”
We asked how many landlords have property related debt – he said the Government says one in five landlords are affected but “we don’t believe that is correct”.
Bolton emphasised that the event was about action “broader than Section 24” and that “taxing landlords into oblivion is not the solution to the housing crisis”.
Cherie Blair was also in attendance and was meeting donors in a separate room to stress the importance of donating to the marketing campaign as well as the legal fund.
The campaign says it has raised £90k of the £250k needed for the judicial review legal costs.
Vanessa Warwick of Property Tribes interviewed Cherie Blair, a video of which you can see below.
She commented that Section 24 was “not a fair law” and had the effect of “distorting the market in favour of big companies and institutional investors”.
Blair added that she was “delighted to be able to do this” and “wouldn’t be arguing the case if we didn’t think we were going to win”.
EYE asked Bolton whether he believed being a landlord was the same as operating any other business and what he would say to home owners who were at a disadvantage compared to landlords with not being able to claim tax relief on mortgage interest.
He started saying that if landlords have “multiple properties then you are running a business” and added that even accidental landlords using lettings agents are “still subject to a 100 different laws and regulations; (with a) responsibility to keep the property legal, keep tenants safe, responsibility to pay taxes. So yes.”
On home owners he said it’s a “completely different tax system” as home owners “don’t pay CGT”.
Bolton added that Section 24 “only affects landlords with finance – if you buy through a company or (are an) overseas landlords, (you’re) not affected”.
He emphasised that the tax change “doesn’t affect the wealthy landlords at all” saying “they wouldn’t have done it for big companies and people buying for cash and the overseas situation who leave property empty and are not adding any value whatsoever”.
Corporate landlords and institutional investors typically hold property in companies and therefore can claim debt interest as a normal business expense.
To substantiate his claim that this was an “outright assault against private landlords” Bolton detailed the additional anti-landlord measures introduced by Government including the removal of wear and tear allowance, the 3% extra Stamp Duty surcharge and that landlords were singled out and excluded from the recent reduction in Capital Gains Tax.
His rallying cry was that if landlords didn’t “stand up and fight” they would continue to let the Government “keep slapping us”.
The event was filled with speakers explaining the effect of the tax change on both landlords and tenants, and how landlords could get together to remove what they feel is an “assault on landlords”.
Sponsors present on the day included Belvoir.
One of the early speakers was Matt Hutchinson of Spareroom.co.uk who produced survey data showing proof of the impact of Section 24 on tenants and landlords.
One question in the survey asked tenants, “How much do your rents need to go up by to force you to move?” and almost one in four said they would have to move with a less than £25 a month rise in their rent.
Westbourne, the communications agency behind the lobbies for HS2, scrapping the 50p top rate of tax and reducing duty on beer, presented their strategy to broaden awareness of the ‘Axe The Tenant Tax’ campaign.
They outlined the campaign’s challenge by quoting a Yougov poll saying “twice as many people support buy-to-let tax hike than oppose it”.
Adding that there are “far more tenants than landlords and (the public are) more sympathetic to tenants than landlords” the campaign had to focus on three points:
- Taxing individual owners more than corporate owners is unfair. They elaborated on this point saying that “if you don’t fight back, there’s every chance they’ll come after the incorporated properties too”.
- Landlords will pass on costs that become higher rents.
- Taxing people more on their retirement – Government is kicking people’s retirement plans.
Nick Tadd of Property Tribes was ever-present throughout the event and said the major concern was that “the regular Joe average landlords, about 1.9m landlords, own fewer than four properties”.
He said these landlords are “in the amateur bracket” and they “don’t even know this is happening”.
Richard Dyson, the Personal Finance Editor at the Telegraph, spoke on stage in support of the campaign and after his talk he said the Telegraph has “taken a view that this tax doesn’t work for anybody”.
He emphasised a number of times that “the tax itself is irrational” and elaborated saying “George Osborne is causing damage to those people he has said he wants to protect – that’s tenants”.
His final line was that “this isn’t a tax against big landlords, this is squarely a tax against small-scale landlords, people relying on property for their pension”.
The pension sentiment was echoed by Lord Howard Flight who summed up the situation: “Landlords are going to get bu**ered.”
With a more moderate tone he went on to say that the biggest reason Section 24 is wrong is because “we’ll end up with less housing units in three years’ time” and that “most MPs don’t even know this ‘Tenant Tax’ exists”.
The best line of the day came from Nick Tadd of Property Tribes.
He said: “Clause 24 is like farting in a lift. It’s wrong on so many levels.”
The only thing missing on the day were tenants standing side-by-side in protest with their landlords to give credibility to the moniker ‘Tenant Tax’.
More info on the campaign can be found at: www.tenanttax.co.uk
Donations for the campaign are being collected at: https://www.crowdjustice.co.uk/case/tenanttax/
Pictured, Vanessa Warwick of Property Tribes and a regular contributor to EYE, interviews Cherie Blair.