A landlord’s group has begun a parliament petition to challenge Chancellor George Osbourne’s plans to reduce Mortgate Interest Relief. According to the Chancellor’s proposals,, announced in his 2015 Summer Budget and reiterated in the Autumn statement that year, landlords operating as sole traders would no longer be able to deduct mortgage interest payments to reduce their tax liabilities.
The petition launched by the Residential Landlord’s Association claims that the proposed tax changes will increase costs for landlords and tenants as landlords seek to offset higher tax liabilities by increasing rents. The Association also claims that a report from the Institute for Fiscal Studies released in response to the budget indicates that individual landlords are taxed more heavily than other homeowners even before the Chancellor’s proposed changes come into effect in 2017.
The petition titled: “Reverse the planned tax relief restriction on ‘individual’ landlords” also claims that landlords operating as sole traders incur costs i.e. mortgage interest in the course of operating their business. The Residential Landlord’s Association, RLA, claims that Osborne’s measures will unfairly target such landlords since they would be unable to offset costs in the same manner as sole traders operating in other sectors. The RLA claims that the tax changes will not affect large institutional landlords and companies which buy their properties in cash. Other campaigners however claim that buy-to-let is offered significant tax advantages compared with investors in other assets such as shares.
In order to warrant consideration for debate in Parliament, a formal government petition requires a hundred thousand signatures and ten thousand for the government to respond officially. The petition deadline is 27th January 2016.