Speculation is growing that landlords could face new tax burdens in the forthcoming spending review and autumn Budget, as the Government looks for ways to raise revenue without breaking its manifesto pledge not to tax “working people.”

Proposed Tax Changes Being Considered:

1. National Insurance (NI) on rental income

   • Currently, landlords do not pay NI as rental income is deemed passive.

   • New rules could force landlords to pay NI similar to self-employed workers.

   • This would disproportionately affect younger or expanding landlords, while retired landlords may be exempt—creating a two-tier system.

2. A separate tax band for rental income

   • This would prevent income-shifting between partners to reduce tax bills.

   • Could increase tax liabilities even on modest rental earnings.

3. VAT on residential lettings (up to 20%)

   • Residential lets are currently exempt from VAT (unlike short lets and serviced accommodation).

   • Any VAT would likely be passed on to tenants, raising rents.

Industry Backlash

• DJ Alexander Ltd, Scotland’s largest lettings agency, has joined the National Residential Landlords Association (NRLA) in warning that further taxation could:

  • Lead to disinvestment by landlords

  • Trigger rent increases as costs are passed to tenants

  • Shrink housing supply, worsening the rental crisis

Context

• The median age of a landlord is 58, meaning many are nearing or past retirement. New taxes could discourage new entrants and growth-minded investors, while protecting more established landlords.

• Landlords have already faced:

  • Loss of mortgage interest tax relief

  • Tighter lending criteria

  • Licensing schemes and regulatory burdens

Sector View

David Alexander, CEO of DJ Alexander, says:

“Once again landlords and property investors are being seen as easy targets. But if many exit the market or restructure, the expected revenue may never materialise—and tenants will suffer the consequences.”

He adds: “The government should work with landlords to grow the private rented sector (PRS), not punish them. That’s the only sustainable path out of the housing crisis.”