"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"
- Kate Davies - IMLA
The Intermediary Mortgage Lenders Association (IMLA) has warned that extending National Insurance (NI) to landlords’ rental income would have serious unintended consequences for smaller landlords operating in their own names.
The association said such a move would exclude incorporated landlords, creating a two-tier system that could widen the gap between individual and corporate property owners. Many smaller landlords, already under strain from recent tax and regulatory changes, could be severely affected.
According to IMLA’s analysis, published in its report The November Budget 2025: Surveying the Options, 58% of higher-rate taxpayers letting properties in their own name would face total tax and NI bills exceeding their entire rental profits, effectively paying more than 100% of earnings back to the Treasury.
The proposal, floated as part of pre-Budget discussions, could therefore push effective tax rates to unsustainable levels. IMLA noted that individuals make up around 81% of the landlord market, meaning the policy would disproportionately impact smaller property owners.
Landlords have already absorbed several financial pressures, including:
the loss of mortgage interest relief
higher capital gains tax bills
a stamp duty surcharge
an increasingly complex regulatory framework
Adding NI contributions on top, IMLA warned, could accelerate the contraction of the private rented sector. The number of buy-to-let properties has already fallen by more than 110,000 since 2022, with rental supply tightening and rents continuing to rise.
IMLA’s report estimates that while extending NI to landlords could raise around £2.2 billion a year, the potential reduction in rental supply, confidence and affordability would outweigh any fiscal benefit.
Kate Davies, executive director of IMLA (pictured), 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,” she added. “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.”
IMLA said that penalising smaller landlords at a time when the government is seeking growth and stability could undermine both objectives by reducing investment, limiting housing choice and increasing upward pressure on rents.
