Landlords represented by Cherie Booth QC have failed in their legal battle against a planned government tax increase on buy-to-let properties.

The landlords argued that new rules, to be phased in from 2017, amounted to an unfair tax on tenants because they would drive up costs for buy-to-let investors, and went to court seeking a judicial review.



But at the high court, Mr Justice Dingemans said: “It would be a miserable spectacle to watch a case that is bound to fail.”

Booth – who with her husband Tony Blair and three children owns at least 10 houses and 27 flats – was initially applauded from the public gallery when she said the government was unfairly penalising individual buy-to-let landlords by “singling them out” for detrimental tax treatment while allowing others to keep their tax perks.

But Timothy Brennan QC, representing HM Revenue & Customs and the Treasury, said the claim was unarguable, adding: “There are cases which justify the courts looking at them in the public interest. This is not one of them.”



Speaking outside the court after the verdict, Booth said: “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.”

While the campaigners have seven days to appeal the ruling, it is understood that a further challenge is unlikely.

The planned tax changes will stop buy-to-let costs – largely mortgage interest payments – being a claimable business expense.



The Axe the Tenant Tax group, which was represented in court by co-claimants Steve Bolton and Chris Cooper, argued that the new rules meant most landlords with mortgages would have to pay tax on their turnover rather than their profit. They said this could leave many with a rental loss and a cash shortfall.

The changes only affect individuals who own rental properties in their own names. Companies that own buy-to-let properties, wealthy cash investors and landlords of holiday lets are excluded.

Axe the Tenant Tax said it represented more than 150,000 landlords and claimed the changes would discriminate against individual landlords and push up rents substantially.

In a statement Bolton and Cooper said they were “outraged” by the court’s decision.

“It has completely missed the opportunity to protect tenants, landlords and the housing market from the disastrous consequences of Section 24,” they said.



“For many, it will also mean the loss of their homes because vast numbers of landlords will be forced to exit the market. Hard-working, responsible landlords will have their pension plans in ruins, but the large corporations and the wealthiest in society, who can buy property without the need for mortgage finance, are systematically excluded from this unfair tax policy.”

The pair said that now the legal route had run its course, they would focus on lobbying the government.

“We will also be encouraging all of our landlords to write to their tenants if they have to increase their rents or sell up, clearly explaining that it is this Conservative tax policy that has forced them into this situation,” they said.

Richard Lambert, chief executive of the National Landlords Association, 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.”

However, Betsy Dilner of campaign group Generation Rent, which represents tenants and thwarted first-time buyers, said: “For too long the tax system favoured people who bought homes to make a profit over people who just wanted somewhere to live. The government’s recent tax changes should help to dampen speculation and give an advantage to people who have to date been shut out of the housing market.”



The prospects for individual buy-to-let landlords to profitably use mortgages to invest in property have been seriously hit by legislative changes. New purchases already attract an extra 3% stamp duty, and from 2017 those with mortgages will see their costs rise steeply. Home secretary Amber Rudd has also launched another crackdown on landlords, warning that from December property owners knowingly renting to illegal immigrants could go to prison.