Industry reacts as Landlords to be hit with N.I tax

Currently, rental income is subject to income tax but not NI. However, by expanding NI to cover this additional source of earnings, the Treasury could raise an estimated £2 billion a year. A landlord earning between £50,000 and £70,000 from property could face an extra £1,000 in tax annually.

The measure is being put forward as part of efforts to plug a £40 billion fiscal shortfall while maintaining Labour’s pledge not to raise the main rates of VAT, income tax, or NI. Critics, however, argue that such a move would risk destabilising the rental market, hitting small and medium-sized landlords particularly hard and ultimately feeding through to tenants in the form of higher rents and reduced supply.

Marc von Grundherr, Director at Benham & Reeves, commented:

“This move smacks of political point-scoring rather than sound housing policy. Applying national insurance to rental income threatens to undermine rental supply by squeezing small and medium-scale landlords, who may pull up stakes or restructure.

We’re already seeing supply pressures in many areas, pushing costs onto tenants. A policy with such serious unintended consequences deserves more scrutiny and a strategic approach, not partisan theatre.”

Siân Hemmings-Metcalfe, Operations Director at Inventory Base, commented:

“Layering yet another financial burden onto landlords, at a time when the Renters’ Rights Bill is about to reshape the sector, is a move too far. The focus should be on stability and encouraging long-term investment into the rental market, not short-term populism designed to plug holes in the Treasury’s coffers.

Policies like this risk deterring responsible landlords, which ultimately undermines the very protections and standards tenants are being promised.”

Sam Humphreys, Head of M&A at Dwelly, commented:
“The reality is that many landlords already operate on fine margins, and measures like this could be the tipping point that drives them out of the sector altogether.

Once stock is lost, it is incredibly difficult to rebuild, and the people who pay the price are tenants facing rising rents and fewer housing choices.

If the Government wants to improve affordability, it should be working to increase supply – not choking it further with punitive taxation.”

Vann Vogstad, Found and CEO of COHO, explains why HMO landlords and tenants will be hit hardest:

“The Chancellor’s reported plan to introduce National Insurance on rental income in the upcoming Autumn Budget is likely to hit HMO and shared-living landlords hardest. These landlords typically generate higher rental income per property than standard buy-to-let investors, meaning they’ll shoulder a particularly large share of the proposed 8% levy.

While this might seem like a clever revenue-raising move from the Treasury’s perspective, it risks triggering serious consequences for the rental market. For many landlords, already squeezed by years of tightening regulation and tax changes, this could be the final straw, prompting them to exit the sector altogether.

The inevitable result would be a shrinking supply of rental properties and further upward pressure on rents at a time when tenants are already grappling with sky-high living costs. Even those landlords who stay in the market are likely to seek ways to recoup their losses, and raising rents will be the most direct route.

Tenants always seem to bear the brunt of government efforts to extract more from the rental sector. In this case, HMO tenants could be particularly vulnerable. These properties already face mounting barriers, including growing resistance from local authorities influenced by negative media narratives around shared housing. It would be a real blow to see this vital part of the market unnecessarily eroded.”