NLA Chief Executive, Richard Lambert, discusses the NLA’s decision to donate £10,000 to the ‘Tenant Tax’ legal fund.
The last few days will be the nearest I will get to living the life of Jack Bauer from the TV series 24.
To say they have been eventful is an understatement and so I thought members should know a little more about the background of why, on Thursday, I announced that the National Landlords Association (NLA) has decided to donate £10,000 to support the Judicial Review (JR) against the Government’s controversial decision to restrict tax relief individual landlords’ finance costs.
More details here!
As hopefully you will know by now, the removal of finance costs relief – announced in last year’s Summer Budget – will be introduced in 2017 as part of the Finance Act and will restrict the rate of mortgage relief to the basic rate of income tax (20%) for all landlords regardless of their personal tax bracket. If you aren’t aware of the changes or if you want to refresh your memory, take a look at the campaign page on the NLA website here.
The measure has been widely criticised and a crowd funded Judicial Review was launched by Chris Cooper and Steve Bolton, two hard-working property business owners who invested in property as a prudent way of securing a modest pension (Chris) and to provide an alternative income (Steve). Both are NLA members.
You can find more details here.
In the days and weeks following the Chancellor’s Summer Budget, the NLA assessed the various possibilities and lobbying strategies open to us.
We looked at a number of different approaches and spoke to many members, politicians, campaigners, government departments and legal advisers. We also took advice in relation to the possibility of embarking on a direct judicial review of the policy. In doing so we came to the conclusion that a judicial review was very unlikely to lead to a positive outcome.
Whilst the policy is certainly unfair, and in our view unjust in the context of existing tax provision, we were unable to identify an argument likely to lead a judge to decide the policy is unlawful. (There is an explanation of what constitutes a judicial review, and their limitations on the judiciary website here: www.judiciary.gov.uk/you-and-the-judiciary/judicial-review/)
We reluctantly decided the chances of success did not justify the likely outlay of tens of thousands of pounds (possibly escalating into the hundreds of thousands) or asking members to donate with no reasonable chance of return or success. You can see our initial statement here.
When the judicial review campaign was launched, we referred those members interested to the crowdfunding page and concentrated on our direct lobbying efforts. A significant number of NLA members agreed with our position but decided to donate individually as well.
So what changed our minds? There were several contributing factors, but two primary reasons clinched it.
Firstly both Steve and Chris indicated to us a few weeks ago that this was a critical time in the fundraising effort. They predict that they need to raise another £250,000 to fund the hearing, if their application is accepted. They told us about a conference they were holding at Earls Court for donors and invited us to attend. We reluctantly declined the invitation to attend because the event clashed with a prearranged Conference For all our local and regional representatives in Bristol. We agreed that a statement of the efforts the NLA had made to lobby against the changes would be read out on our behalf.
Secondly, this has been the year of the unexpected. If anyone predicted this time last year that Jeremy Corbyn would be Leader of the Labour Party, Donald Trump the Republican Nominee for President, and Leicester City Premier League champions, they would be very rich indeed
To be clear, the NLA has yet to see an argument which would convince us to change our mind about the Judicial Review’s chances of success, but we have to recognise that there is always the possibility that we may be wrong. For all the humble pie I would have to eat, I for one would be quite happy to be proved wrong on that judgment.
So as a goodwill gesture to the campaign, in recognition of our shared aim of fighting on behalf of landlords, we decided to make a one off donation. When the conference opened yesterday morning, the campaign had raised £83,000. The NLA is the largest landlord representative organisation in the country, and we have never wanted to be seen in any way to stand in the way of the legal challenge, irrespective of our views.
Given the circumstances, I agreed with the Chairman that I should change my travel plans to speak in person at the conference, and then make a delayed appearance at our own event. We thank Chris and Steve for not only fitting us into the schedule, but giving us the first speaking slot available at 10am.
If any of the attendees were bleary eyed after a long journey to London for a 9.30 start, they were certainly awake by the time I had finished my speech. The stunned delight of the campaign organisers when we tipped them off beforehand and the burst of applause from the audience (many of whom were NLA members) I think justified our decision. You can see my full speech here.
Whilst it wasn’t quite Jack Bauer to the rescue, we hope that our £10,000 will ensure that they get their day in court.
The NLA is committed to continued lobbying to achieve a political solution to the problem presented by this disastrous government policy and we still hope to achieve a positive outcome for the hundreds of thousands of landlords whose businesses are currently in jeopardy.