Think tank calls for crackdown on landlords profiting from Right to Buy
7 months ago | 3 comments
Left-wing think tank claims landlords should face same tax rates as tenants
9:01 AM, 24th September 2025, 7 months ago
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Ahead of the Budget, a left-leaning think tank claims “landlords should face the same tax rates as tenants,” calling for changes to Section 24.
In a report, the Resolution Foundation urged Chancellor Rachel Reeves “to level the playing field” with a 2p cut in National Insurance (NI) matched by a 2p rise in income tax, which the think tank estimates could raise £6 billion.
The report comes amid rumours circulating in the media that landlords could be required to pay National Insurance on rental income.
There is no obvious reason why landlords should face lower tax rates than their tenants
The think tank claims, “there is no reason why landlords should face lower tax rates,” and demands a two-point increase in mortgage tax relief.
Section 24 was introduced in the Finance Act 2015 by then-Chancellor George Osborne, removing a landlord’s ability to offset mortgage interest from rental income before calculating tax liability, while allowing only a 20% basic rate deduction.
The report says: “Rental income, taxable savings income and some other minor forms of capital income – which do not attract NI – would face a 2 per cent tax rate rise. Rental income is the most significant element here, but there is no obvious reason why landlords should face lower tax rates than their tenants.
“The main expected economic impact of this particular change (which would also include the mortgage tax relief rate rising by 2 points), would be slightly lower house prices and slightly higher home ownership, with any impact on rents being small.”
As previously reported on Property118, many landlords, including Mick Roberts, one of Nottingham’s largest landlords housing benefit tenants, argue that Section 24, rather than landlords, is responsible for rising rents.
In footnote references, the think tank admits that lower post-tax profits may lead some landlords to sell, but claims, “they can primarily only ultimately sell to tenants, meaning offsetting demand and supply effects within the private rented sector. The ongoing freeze of Local Housing Allowances is a far more relevant consideration for low-income tenants than small changes in landlord taxation.”
Chancellor should do all she can to avoid loading further pain onto workers’ pay packets
The references also claim only unincorporated rental income would be affected “and this would encourage incorporation, but this would be counteracted by our proposal to raise the basic rate of dividend taxation.”
The think tank demands the Chancellor extend employer NI to Limited Liability Partnerships and raise taxes on dividends, where the basic rate is 8.75%, which they claim could raise another £2.5 billion.
Adam Corlett, principal economist at the Resolution Foundation, said: “Policy U-turns, higher borrowing costs and lower productivity growth mean that the Chancellor will need to act to avoid borrowing costs rising even further this autumn. Significant tax rises will be needed for the Chancellor to send a clear signal that the UK’s public finances are under control.
“Any tax rises are likely to be painful but given the fallout from the recent employer NI rise, the Chancellor should do all she can to avoid loading further pain onto workers’ pay packets.
“She can do this by switching our tax base away from employee National Insurance and onto Income Tax, which is paid by a far broader group in society. This should form part of wider efforts to level the playing field on tax, such as ensuring that lawyers and landlords face the same tax rates as their clients and tenants.
“These sensible reforms would raise revenue while doing the least possible harm to workers and the wider economy. And by acting decisively, the Chancellor can turn her full attention back onto securing stronger economic growth.”
Elsewhere, the think tank also calls for applying a carbon charge to long-haul flights and shipping, and reforming Vehicle Excise Duty to account for the road damage, noise and air pollution caused by heavier vehicles.
The full report can be read by clicking here.
Tags:
Budget 2025, Landlord Tax, mortgage tax relief, National Insurance, rental income, Resolution Foundation, section 24
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Member Since December 2023 - Comments: 1574
8:46 AM, 24th September 2025, About 7 months ago
Reform the ISA system by imposing a lifetime limit of ten time the tax free allowance. So, around £125k.
Member Since October 2023 - Comments: 201
10:43 AM, 24th September 2025, About 7 months ago
Reply to the comment left by Cider Drinker at 24/09/2025 – 08:46
Why would you cap ISA’s?
Its what people use to save for their retirement.
And you already paid tax on your savings once already, when you earned it!
Member Since June 2014 - Comments: 1562
10:57 AM, 24th September 2025, About 7 months ago
Reply to the comment left by David100 at 24/09/2025 – 10:43
“Why would you cap ISA’s?”
No logical reason, just the usual politics of envy.
Member Since May 2024 - Comments: 47
11:07 AM, 24th September 2025, About 7 months ago
Reply to the comment left by Monty Bodkin at 24/09/2025 – 10:57
Maybe double the tax on cider instead.
Member Since February 2020 - Comments: 360
11:55 AM, 24th September 2025, About 7 months ago
The first point is the focus should be on spend reductions rather than tax rises.
But NI should be removed entirely, even if replaced with income tax.
It is not hypothecated so it just adds bureaucracy.
Replacing it with income tax should make people aware of their real tax rates.
Member Since March 2024 - Comments: 281
3:41 PM, 24th September 2025, About 7 months ago
Reply to the comment left by Downsize Government at 24/09/2025 – 11:55
Hugely regressive for those who currently don’t pay NI with relatively modest incomes- just the basic full new state pension will come into the basic rate tax band from April 2027 due to personal allowances being frozen to 2028 and rumoured to be pushed out to 2030 when Rachel fiddled the numbers in November. Rolling NI into income tax will mean a starting rate of 28%. Add in small occupational pensions or rent on a single modest property to supplement retirement and that’s just another reason for pushing out smaller landlords. Why would any same person keep that money in bricks and mortar and pay 28% tax on what’s left after ever increasing costs when they could (on current rules) be sheltering £20k a year in either a cash or equity based ISA.
Any landlords who are not able to use the full ISA allowance each year because their capital is tied up in bricks and mortar are already being taken for mugs by Rachel and her predecessors – adding 8% to current tax rates would really be taking the proverbial out of property owners.(Let’s hope Rachel ignores Cider Drinker – I’m well on the way to £125k in ISAs after cashing in most of my properties and intend to keep shoving in my £20ks worth each year thank you very much)..
Maybe another, lower, starting band of income tax could make some difference for a transition over a decent period of time to roll NI into income tax – but that would take someone with brains and a long term plan which rules out out current chancellor.
Member Since May 2019 - Comments: 18
4:01 PM, 24th September 2025, About 7 months ago
The headline of this article just creates division and fuels anti landlord rhetoric. For a start we do not pay less income tax than tenants. Rental income is taxed at your marginal rate even if you make a loss due to section 24. I don’t see how this is not paying as much as tenants. If I’m to pay n.i on my rental income however it’s dressed up I’d like my state pension to be topped up. Thats not going to happen. That’s why a lefties think tank has suggested penalising landlords even more under section 24 as it avoids the issues associated with N.i. Well the chickens will come home to roost and it can only mean more landlords leaving the market.
Member Since May 2025 - Comments: 6
7:25 PM, 24th September 2025, About 7 months ago
Interesting perspective — aligning tax rates for landlords and tenants would certainly shift incentives in the housing market.
As a site focused on *First Homes Scheme* and affordable ownership, I’ll be watching how such policies might influence new-home supply, developer behaviour, and access to homeownership.
https://firsthomesscheme.com/
Member Since March 2024 - Comments: 281
8:41 PM, 24th September 2025, About 7 months ago
Much has been said over the years about how landlords are ‘non productive’ in terms of what they contribute to the economy.
Presumably that was before the explosion of lefty, group think addled Guardian reading leaches who have created a whole industry in attacking something that, if they shut their lap tops, put down their soya milk lattes and tried to build a portfolio of decent homes out of neglected Victorian stock in what might be described as ‘challenging’ communities with no readymade queue of desperate tenants in an under supplied market that is what the PRS is now reduced to, like some of us old hands have done – they wouldn’t last a week before they cited unacceptable demands impinging on their mental ‘elf and threw in the towel.
Member Since February 2023 - Comments: 7
8:54 AM, 27th September 2025, About 7 months ago
in 1978 the basic rate of tax was 34%
vat was 10%
now basic rate of tax is 20% and vat is 20%
All governments do is play around with the figures to take more money from us.