The UK government has recently added a new tax rule which would avoid offsetting of mortgage interest costs against rental profits prior to tax calculation by landlords, Express reports.
However, buy-to-let investors are crying foul over the new ruling, which would make them liable to tax regardless if their newly acquired property is not yet generating profit or is losing money.
This new tax rule which would bring tax costs higher is referred to as "Clause 24" which is included in the 2015 Financial Bill.
Steve Bolton and Mark Alexander are the millionaire property owners who are leading a group of landlords in mounting a legal challenge to the Government's proposal.
According to the claim, the plan violates "a long-established principle of taxation that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits."
Investors are not backing down and are hiring the services of Cherie Blair's law firm in preventing further tax fees on their investments.
Mrs. Blair together with her husband, former Prime Minister Tony Blair, are reported to have a combined total net worth of £30million based on their real estate portfolio which also includes buy-to-let flats in Bristol and Manchester.
According to Mr. Bolton, the Government's initiative is "unfair."
"It's not clear why the Government has chosen to attack only buy-to-let owner-operators with mortgages. Not only is it unfair, but we believe that it could also be unlawful," he said.
Bolton is seconded by The Institute of Chartered Accountants in England and Wales (ICAEW), criticizing the Tories' plans as " unreasonable, unworkable and unthought through."
With the housing crisis showing no signs of abating, Chancellor George Osbourne expressed his plans last month of building hundreds of thousands of new homes which will hopefully help the market.
But the buy-to-let boom isn't the only factor seen to have caused the housing shortage. A huge wave of foreign investors who are targeting properties especially in the capital along with high level of immigrations are also considered reasons for the current real estate "crisis."