Rachel Reeves’s latest budget gambit (to slap national insurance on rental income) is being sold as a fairness measure. “Unearned income,” they say. Targeting wealthy landlords, they insist. The reality? Tenants are likely to pick up the tab.
The Treasury projects a £2 billion windfall from the move. Yet most private landlords earn between £50,000 and £70,000 in rental income. For them, an extra £1,000 a year isn’t trivial, and landlords will respond the same way any rational business does: by raising rents or selling properties. Smaller landlords will feel it hardest, yet tenants in their properties, often families or young people struggling to get on the housing ladder, will bear the consequences.
Even the government’s vaunted Renters’ Rights Bill offers only partial protection. Landlords can still adjust rents for new tenants. And when small-scale landlords sell up, the rental stock shrinks, competition rises, and rents climb. What was pitched as a “tax on the rich” could easily become a tax on ordinary renters.
The plan also risks driving landlords to incorporate or use corporate structures, leaving tenants with fewer, larger, and more impersonal landlords—hardly a step toward a healthier housing market. Meanwhile, buy-to-let investors with deeper pockets can absorb the cost, reinforcing inequality.
Revenue projections aside, the policy is a blunt instrument. It looks like fairness on a spreadsheet but plays out as pain in the real world. We will end up with tenants paying for the government’s accounting fix. Housing policy should expand supply, stabilize rents, and protect renters, not turn them into unwilling funders of a £40 billion budget hole.
The Treasury could raise funds without punishing tenants: progressive capital gains taxes, targeted levies on luxury homes, or measures that encourage construction of genuinely affordable housing. National insurance on rental income? It’s a headline-grabbing idea, but the people who will feel it most are the ones who can least afford it.
