It is worth noting that Section 24 will only affect private landlords who have bought using a mortgage. It doesn’t apply to buy-to-let properties purchased through a company, or to overseas investors.
Section 24 will put landlords in a very difficult position, and could see rents being raised in order to ensure that property investments are financially viable. This increase in rent would, of course, impact on tenants, who will suffer as a result, making the housing crisis worse; this is why Section 24 is being called the Tenant Tax.
One group campaigning for it to be abolished, Axe, claims to represent more than 150,000 landlords. According to their website, 68% of landlords did not raise their rents in 2015, but 86% will have to if Section 24is not abolished before it is due to come into force in April 2017.
Axe has been campaigning for a judicial review and is represented by Cherie Booth QC; the review was only last month refused by the High Court. Speaking after the verdict, Booth stated: “We will continue to engage with the government to make sure that the message comes over about the inherent unfairness of this tax. It’s not over yet.”
Commenting on the High Court’s decision, Richard Lambert, Chief Executive Officer at the National Landlords Association (NLA) said: “This decision is ultimately disappointing, not just for landlords, but for the tenants who will see their rents rise as a consequence of the changes to landlord taxation. While we have never been convinced that there was a solid enough legal case to overturn George Osborne’s decision, we hoped the Courts would be prepared at least to listen to the arguments. We congratulate Steve, Chris and the campaign team on their determination, perseverance, and their success in raising awareness and increasing the visibility and understanding of what will be a dramatic
At Franklyn James we will always advise each landlord on the best course of action for their property portfolio; whether this is to increase their rents, or even to sell their properties. Of course, selling is usually a last resort, and we are confident that, working together, we can find a solution that will ensure the continued profitability of your buy-to-let business.
For a detailed review of your portfolio, and the impact of Section 24, contact our team on 020 7005 6080.