Generation Rent, a well-known campaign group, has been pressing the government for close to a year to introduce National Insurance contributions on landlords’ rental profits. The organisation believes this change would make the tax system fairer between property owners and ordinary workers.
This week, news reports revealed that the government is giving serious consideration to the proposal. Leaks suggest that ministers are exploring ways to apply National Insurance to landlords, which could lead to a significant shift in how rental income is taxed.
At present, landlords are already required to pay income tax on their rental profits. Some allowable expenses can still be deducted, but the system has long been criticised for offering a lighter burden compared to other forms of income. By contrast, employees and the self-employed pay National Insurance on their earnings, which makes the treatment of rental income look comparatively generous.
National Insurance applies to those aged between 16 and state pension age, covering both employed and self-employed workers. It is payable on income exceeding £242 a week or on self-employed profits of more than £12,570 a year. The contribution rate stands at 8% for employees and 6% for those who are self-employed. For earnings or profits above £50,270, the rate drops to 2%.
Generation Rent has argued that this discrepancy effectively allows landlords to pay a lower overall tax rate on their rental profits compared with workers on similar incomes. The campaign group claims this undermines fairness in the tax system, particularly during a time when housing costs remain a major burden for renters.
It has now been confirmed that Generation Rent has been advocating for this change since last autumn. The organisation, chaired since then by former Labour MP Karen Buck, has made repeated calls for landlords to be brought into the National Insurance system.
Ahead of the autumn Budget presented by Chancellor Rachel Reeves, Generation Rent issued a statement outlining its position. The group pointed out that wages are subject to National Insurance while rental profits are not, leaving working households facing a heavier tax burden compared with property investors.
The group also acknowledged that if such a policy is introduced, it is likely to be met with opposition from landlords who still have mortgages. Many of these landlords have already seen their tax relief on mortgage interest significantly reduced in recent years, leading to rising costs and mounting discontent.
Beyond National Insurance, Generation Rent has called for broader tax reforms targeting property wealth. It has argued that profits from the sale of assets, particularly housing, should be taxed at the same rate as income from work. At present, capital gains on property can be taxed at lower rates, something the group views as unfair.
The organisation highlighted that property values often rise due to improvements and investments in the surrounding community rather than any effort made by the individual landlord. For this reason, they argue that property-related capital gains should not enjoy more generous treatment than wages or salaries.
Specifically, the campaign has urged the government to increase the capital gains tax rate on property sales to match income tax rates. Such a move would, in their view, bring greater balance to the tax system and ensure landlords contribute more fairly in line with other taxpayers.
The debate has already sparked significant interest in the wider housing sector. Many landlords have expressed concern that such measures could increase costs and discourage investment in rental properties. Critics argue that this could reduce the number of available homes to rent, placing more pressure on tenants.
However, supporters of the proposal counter that the current system already heavily favours landlords. They point out that rising rents and shortages in the housing market have left tenants struggling, while landlords continue to profit. Applying National Insurance, they argue, would help to level the playing field.
Generation Rent’s push also highlights its close ties with the Labour Party. Karen Buck, who took over as chair nine months ago, is a former Labour MP, while the organisation’s chief executive, Ben Twomey, previously stood as a Labour parliamentary candidate. This connection has fuelled speculation that Labour may be more receptive to the group’s proposals.
As discussions continue, it remains uncertain whether the government will move forward with imposing National Insurance on landlords. If introduced, the policy could reshape the taxation of property income in the UK, sparking debate not only between landlords and tenants but also across the political spectrum.
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