The Intermediary Mortgage Lenders Association (IMLA) said this would wipe out the profits for 58% of higher-rate landlords and risk creating a “two-tier system” between individual and incorporated landlords.
If National Insurance applies to rental income, this will not affect landlords who hold properties in limited companies, but would impact those who invest in their own name. Individual landlords currently make up 81% of the private rental market.
IMLA said this would “widen the gulf” between the two types of landlords and put additional pressure on smaller landlords on top of other tax and regulatory changes.
IMLA said this could be “devastating” for landlords and push their effective tax rates to “unsustainable levels”.
The organisation said landlords had already been hit by the removal of mortgage interest relief, higher capital gains tax (CGT) bills, a stamp duty surcharge and more “demanding” regulations.
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It warned that this could also result in the number of buy-to-let (BTL) properties in the market and raise rents as supply contracts.
IMLA analysed the impact in its report The November Budget 2025: Surveying the Options and said extending National Insurance could raise around £2.2bn each year, but the “damage to rental supply, market confidence and tenant affordability would far outweigh the benefit”.
Kate Davies, executive director of IMLA, 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. 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.”
