Landlords warn Budget tax rises could fuel rental shortages

Landlords are sounding the alarm over tax proposals, warning that the November Budget could deepen the country’s rental supply crisis if tax rises are introduced.

The latest figures from Pegasus Insight show anxiety building across the private rented sector.

It found that eight in 10 landlords describe the proposed National Insurance charge on rental income as ‘very concerning’.

The proposed 8% levy has quickly become the biggest worry for landlords who are already feeling squeezed.

Landlord tax burden

The firm’s founder and director, Mark Long, said: “The tax burden is now seen by landlords as every bit as threatening as regulation.

“The possibility of a new National Insurance charge on rental income is causing alarm across the sector, not just because it would erode profitability, but because it would further undermine confidence in what has already become a heavily taxed form of investment.

“Many landlords feel that another policy shock, on top of CGT and the Renters’ Rights Act, could tip the balance and force them to sell.”

He added: “Every indication from our data is that a growing number of landlords are reassessing their position.

“If the November Budget adds yet another layer of taxation, we can expect more to exit the market in 2026, further reducing rental supply at a time of rising demand.”

Landlords will sell

However, landlord worries go beyond National Insurance with three-quarters saying they are worried about possible Capital Gains Tax changes.

That figure jumps to 85% among those who have recently sold or expect to sell soon.

Many landlords fear that any further tax rises would make the sector even less attractive.

The research highlights that a shift is already underway with 40% of landlords preparing to sell at least one property over the next year.

Pegasus found that only a small fraction are planning to buy.

Property118 commercial reality check

Noise about tax rises will continue. Serious landlords turn turbulence into structure, numbers and decisive planning. Stability comes from preparation, not headlines.

What serious landlords should do next

Model your post-Budget position now: Run portfolio forecasts using plausible NI and CGT scenarios so you can act before pressure turns into lost margin.

Document and audit readiness: Keep valuations, cost bases, loan terms and maintenance records updated. Clean data protects decision speed when policies shift.

Selective disposals: If weaker assets no longer fit your gearing or yield targets, plan exits on your own terms. If you are considering selling, it is worth reviewing this guide on calculating Capital Gains Tax before making any decisions: https://www.property118.com/why-every-landlord-should-calculate-cgt-before-selling-a-single-property/

Smart refinancing: Review fixed-rate maturities, stress-test affordability and explore products that rebalance gearing while preserving cashflow resilience.

Structural planning: Assess whether your ownership structure enhances flexibility, liability management and future refinancing options.

Capital redeployment: Prepare a redeployment plan that pivots capital into stronger units, higher-yield assets or counter-cyclical niches.

Delegation and automation: Systemise rent collection, maintenance tracking and compliance reminders to reduce drag and free time for strategic work.