The idea of forcing landlords to pay National Insurance (NI) on rental profits did not emerge in isolation. It has been a core demand of the Generation Rent activist group for nearly a year.

This week, government sources selectively leaked that the Treasury is examining the policy. Landlords already pay income tax on rental profits, though some costs can still be offset. NI, by contrast, is currently charged on earned income:

• Payable from age 16 to state pension age

• On income over £242 a week or self-employed profits above £12,570 a year

• At 8% for employees, 6% for the self-employed

• Falling to 2% on income above £50,270

Extending NI to rental income would mark a significant shift.

Generation Rent, chaired since late 2024 by former Labour MP Karen Buck, first called for such a measure in the run-up to last year’s Autumn Budget. At the time, the group argued: “Landlords who don’t have a mortgage pay a lower tax rate on their rental profits than someone in the same tax bracket who only has an income from their job. This is because wages are subject to National Insurance but rental profits are not. Requiring landlords to pay NI contributions would restore some balance with workers.”

The group has also pressed for capital gains tax on property to be aligned with income tax rates, insisting that rising property values reflect local market changes rather than landlord effort.

Landlords, however, see it differently.

Industry voices warn that layering NI on top of existing income tax would effectively double-tax rental profits. Small landlords — many of them pensioners relying on modest rental income — say they would be hardest hit, while large corporate landlords with deeper pockets could weather the blow.

Critics also argue that higher landlord costs inevitably feed through to tenants. With the supply of rental homes already falling, they warn that NI on rents would only accelerate the exodus of landlords from the market, tightening supply and pushing rents higher.

As one landlord representative put it this week: “At the end of the day, tenants pay for everything. If landlords face higher taxes, they will either sell up or raise rents.”

With Generation Rent’s leadership closely linked to Labour — chief executive Ben Twomey is a former Labour candidate — campaigners see momentum building for change. But landlords are equally vocal that tenants, not landlords, will ultimately foot the bill.