The Residential Landlords’ Association is taking legal advice on whether George Osborne’s buy to let tax changes are a breach of the Human Rights Act and European Union law on the free movement of capital.
The measure under review is the controversial change to mortgage interest tax relief available for buy to let investors, restricting the relief to the basic rate of income tax even if the investor is a higher-rate tax payer.
The RLA’s advice, now being sought, has been revealed as part of the association’s latest outspoken criticism of the government, which it accuses of discriminating against UK based investment in the housing market by making it easier for foreign investors to purchase properties.
In a submission to the Treasury, the RLA says that in the Chancellor’s Autumn Statement in November it was announced that a three per cent levy would be added to stamp duty for the purchase of buy to let property, except where 15 or more properties were purchased at once.
The association’s submission says that as the vast majority of investment in UK rental housing has been made by small landlords owning just a handful of properties to rent, this measure discriminates against them in favour of larger investors, many of whom are likely to be from overseas.
The RLA is calling for all new build properties contributing to a net increase in the housing stock to be exempt from the stamp duty levy. A survey of over 1,100 landlords by the RLA found that 30 per cent would be more likely to buy new properties if this were the case.
The RLA claims that the independent Office for Budget Responsibility is uncertain about the likely impact of the stamp duty surcharge, which is scheduled to come into effect on April 1. Therefore the association wants this deadline to be delayed.
“It is astonishing that a Conservative Chancellor is leaving the way open for foreign investors and cutting opportunities for individual UK landlords. Regardless of the Government’s plans for home ownership, demand for rented housing is only set to increase” says RLA chairman Alan Ward.
“The government needs to understand that not everyone will be able to afford to buy a house or indeed want to, even if more houses are built. Its whole policy towards the private rented sector needs to change. If it does not, it will only make the housing crisis worse.”
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