Association warns extending National Insurance on rental income could trigger landlord exodus

An association warns extending National Insurance on rental income will have serious unintended consequences for small landlords and create a two-tier system.

The Intermediary Mortgage Lenders Association (IMLA) warns the rumoured proposal could cause landlords to leave the market and push landlords’ tax rates “to unsuitable levels.”

According to IMLA’s report, The November Budget 2025: Surveying the Options, while extending National Insurance to landlords might raise around £2.2 billion annually, the damage to rental supply, market confidence and tenant affordability would far outweigh the benefit.

A short-sighted and self-defeating move

IMLA say small landlords would take a huge financial hit as incorporated landlords would be exempt creating a two-tier system.

According to IMLA’s report, 58% of higher-rate taxpayers letting properties in their own name would face total tax and National Insurance bills exceeding their entire rental profit and would be paying more than 100% back to the Treasury.

Kate Davies, executive director of IMLA, said: “Extending National Insurance to landlords’ rental income may appear an easy way to raise money, but in practice it would hit exactly the wrong people.

“It would punish smaller, often part-time landlords who provide homes for more than four million UK households, while leaving larger incorporated operators untouched. That is both unfair and economically counterproductive.

“This would be a short-sighted and self-defeating move. Fewer rental homes mean higher rents, less mobility, and more pressure on public housing. At a time when the UK needs more investment in property, not less, this proposal risks driving it away.”

Trigger a landlord exodus

The association warns that imposing National Insurance on rental income could have devastating consequences for the private rented sector, potentially triggering a landlord exodus and driving up rent prices.

According to IMLA, the number of buy-to-let properties has already fallen by more than 110,000 since 2022, and introducing National Insurance would disproportionately affect individual landlords, who make up 81% of the market.

The association added: “At a time when the government is seeking growth and stability, penalising smaller landlords risks undermining both by reducing investment, shrinking housing choice, and putting upward pressure on rents.”