(ii) If so, should we take it into account in this case?<\/em><\/span><\/p>\nHe then considers that landlords have 2 streams of income from properties: rent and capital appreciation. The latter has often been overlooked by Tribunals that have allowed mortgage costs to reduce a RRO award: it is mostly an invisible income stream as it is not realised until sale (or re-mortgage, some might argue). However it can be substantial: Judge Latham points out that properties in Camden, the subject property’s borough, have increased in value fourfold since 1990. All tenants know that their rent is\u00a0 paying their landlord’s mortgage: an uncomfortable fact for tenants that can’t get a mortgage themselves in order to “get on the housing ladder”. To allow those costs as a deduction for a RRO award adds salt to this wound.<\/p>\n
As we argue in every case submitted: mortgage costs are now being phased out by HMRC as an allowable cost for income tax calculation on lettings by law-abiding landlords, so why, oh why, should they be allowed by HMCTS as a deduction for criminal landlords when calculating a RRO award?<\/p>\n
Happily Judge Latham agrees this is anathema:<\/p>\n
38. We therefore conclude that as a general matter of practice, it would not be appropriate to make a deduction for mortgage interest. We highlight three factors:<\/span><\/em>
\n(i) A person who acquired a property with the benefit or a mortgage would be required to make the relevant interest payments regardless or whether or not the property is let.<\/span><\/em>
\n(ii) Should the size of a RRO depend upon whether a landlord has taken out a loan of \u00a31m, \u00a30.5m or owns 100% of the equity? We suggest that it should not.<\/span><\/em>
\n(iii) It would be invidious for a tribunal to seek to apportion the mortgage interest paid between to the capital and income elements of a landlord\u2019s investment. We are satisfied that mortgage interest rather relates to the acquisition of a capital appreciating asset.<\/span><\/em><\/p>\nAs it happens, Parker v Waller, \u00a742, disallowed mortgage costs where they stem from a re-mortgage anyway. As this was also the case in the above matter, the\u00a0 deliberations of Judge Latham were not actually necessary.\u00a0 Though very welcome.<\/p>\n","protected":false},"excerpt":{"rendered":"
Missed this decision last year where Judge Latham, at the London FtT, takes time to deliberate on whether mortgage interest can be a legitimate cost that is allowed by the…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/posts\/151"}],"collection":[{"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/comments?post=151"}],"version-history":[{"count":4,"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/posts\/151\/revisions"}],"predecessor-version":[{"id":157,"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/posts\/151\/revisions\/157"}],"wp:attachment":[{"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/media?parent=151"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/categories?post=151"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/getrentback.org\/blog\/wp-json\/wp\/v2\/tags?post=151"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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<\/p>\n