Landlords could be hit with a new National Insurance (NI) levy on rental income in the Autumn Budget, in a move the government is apparently considering to plug the black hole in the public finances.
But experts warn such a step would be the final straw for landlords already battered by years of tax changes, and predict that tenants — not landlords — will end up footing the bill through higher rents.
Michelle Lawson, Director at Fareham-based Lawson Financial, said tenants will ultimately foot the bill.
She said: “The assault of successive governments on landlords continues. A move like this will simply push rents up further as landlords seek to cover the increased costs. In short, the tenant will likely foot the bill and they, as we all know, are already stretched beyond belief.
“Unless there is an ulterior motive, other than complete decimation of the rental sector and landlord, I cannot fathom why this is happening.”
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, agreed, adding: “Landlords have long been successive governments’ soft target, and this could be the coup de grâce. Further taxes on landlords’ ever-decreasing profits will see them either exit the sector or push up rents to cover the tax.
“If even more landlords exit the sector, supply will drop and rental prices will go stratospheric. Make no mistake, it will be working people and tenants who will ultimately pay the price of this move if it is implemented.”
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said: “In 1381, we had the Peasants Revolt. In 2025 we are going to have the Reeves Revolt. This idea has been floated before but it could become a reality. Landlords with properties in their personal names should be seeking professional advice as that golden egg could become a noose around their necks.
“Tenants, also known as tomorrow’s first-time buyers, will foot the bill one way or another. Regardless, Reeves simply has to go. She may have the PM’s support but she has neither the support nor the confidence of the British public.”
Patricia McGirr, Founder at Burnley-based Repossession Rescue Network, said: “This proposed move reminds me of the proverb, ‘You can shear a sheep many times, but you can skin it only once’.
“Landlords have been easy pickings for the Chancellor looking for a quick way to raise income. This could be a step too far, causing serious increases in debt and resulting in more landlords exiting the market.”
Rob Mansfield, Independent Financial Advisor at Rootes Wealth Management, said the lack of supply is the key problem that needs addressing.
He added: “The failure to build enough houses has led several governments to target landlords and try and force them out of the market in the belief that it will enable people to buy houses.
“It’s at best a sticking plaster but in the meantime the government hits landlords with more tax, either National Insurance if you keep it or capital gains tax if you sell.”
Graham Wells, Founder and Financial Coach at Haddington-based GroWiser Financial Coaching, questioned the government’s understanding of supply and demand.
He said: “It makes you wonder if the government really understands the basic fundamentals of supply and demand. Whatever your views on landlords, it’s a fact that the private rental sector is shrinking due to a tightening of regulations and tax policy.
“Introducing national insurance on rental income, whether right or wrong in principle, will feed the decline in available homes and increase rental costs further. Whatever the Chancellor hopes to raise in additional taxation will ultimately be passed onto tenants, who are already stretched.”
