The property investment landscape has become increasingly difficult in recent years — and reports suggesting that National Insurance could be applied to rental income may mark a significant new challenge for private landlords.
Already under pressure from rising interest rates, low capital growth, and a wave of legislative and tax changes, landlords are facing tighter margins and heavier compliance demands. Increased affordability checks, higher acquisition costs, and stricter maintenance standards have added further strain.
New tax proposals reported in the press last week — if brought forward — risk further discouraging private investment in the residential rental market.
Mark Bailey, partner at Landwood Group, said NI on rental income “could be the final straw for many landlords”.
He explained: “Layering National Insurance on top of rental income risks being the nail in the coffin for landlords already stretched to the limit. Margins are wafer-thin thanks to soaring mortgage rates, tougher regulation and an existing tax burden. Add NI into the mix and staying in the market starts to make little financial sense.
“At Landwood, we’re already seeing landlords approaching us for controlled exits. Some are acting proactively, others are trying to protect their assets before it’s too late.”
“Every time property ownership becomes less profitable, supply shrinks. Fewer landlords remain in the market, fewer properties are available to rent and rents inevitably rise. Yet policymakers often seem surprised when this happens.
“National Insurance threats, coupled with suspected new levies on high-value homes and the removal of capital gains tax exemptions, don’t just affect landlords. They directly hit tenants too, making housing less affordable and intensifying pressure across the rental sector.
“This is a wider market issue where the private rented sector has long been a stabilising force, but measures that make investment less viable threaten to undermine the entire system.”
He added: “Policymakers need to recognise that landlords aren’t an endless revenue source. Push them too far and supply contracts, rents rise and tenants pay the price. National Insurance on rental income could be the trigger and the market needs to be ready for the fallout.”
Ian Narbeth, real estate consultant at law firm DMH Stallard, concurs that residential landlords will be concerned about yet another cost of running their businesses.
He commented: “It will be a reversal of logic to charge landlords employer-type NI, since employers pay rather than receive income from their employees. Landlords must hope that the Treasury, faced with a multitude of complex issues and anomalies will shy away from this idea.
“The government is in denial that its housing policies are leading to an exodus of landlords.
“Even if the number of landlords goes up this year, demand is increasing even faster, so losing any rental properties from the market is likely to lead to an increase in rents.
“If corporate private landlords are not to pay NI, they will still benefit from rent increases. The fat cats will get even fatter.”
“Tenants who welcome this new tax may come to regret what they wish for,” he added. “The government will hurt the very people it says it cares about. If this misguided idea becomes law, let us hope Labour MPs are open with their newly homeless constituents about the true causes of their predicament.”
Will this also affect the thousands of landlords who are pensioners and do not pay NI? Most small private landlords invested to give them a pension.
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