A leading legal expert has warned that the government’s proposed National Insurance (NI) levy on rental income may disproportionately hit small landlords while sparing large corporate operators.

Ian Narbeth, real estate consultant at DMH Stallard, says early indications suggest the levy will not apply to commercial property—and it remains unclear whether corporate Build-to-Rent landlords will also be excluded.  “It may be that Mrs Jones, 78, a widowed nurse who relies on £10,000 a year rent from one inherited property to supplement her pension, will pay more NI on her rent than Goldman Sachs or M&G,” Narbeth argued.

He also questioned the logic of applying employer-style NI to landlords: “The Treasury maintains the fiction that National Insurance is not just another tax. One might ask what pension or benefits will be received by a company? Individuals over pension age don’t pay NI, so it would be a reversal of logic to charge landlords as though they were employers.”

Narbeth added that the measure could worsen housing pressures:

• Even a modest reduction in supply risks pushing rents higher as demand continues to rise.

• Corporate landlords could still benefit from rent increases if exempt.

• Tenants, not landlords, are likely to bear the ultimate cost.

“The prospect of the Renters Rights Act has already led to rents rising faster than inflation in many areas,” he said. “It is almost inevitable that rents will climb further if NI is charged, as landlords seek to cover mortgage costs and maintain income. Tenants who welcome this new tax may come to regret it.”

He concluded that, if implemented, the measure risks accelerating the exodus of smaller landlords while fuelling rent inflation to the benefit of large investors.