More than seven in every ten brokers (72%) say their landlord clients are set to slim down their portfolios if National Insurance (NI) is applied to rental income, according to polling undertaken by specialist lender Landbay.
The buy-to-let (BTL)lender asked brokers, how they thought the move could affect their average landlord client’s investment decisions.
More than a quarter said they thought their landlord clients will sell some of their properties, slimming down their portfolios but staying in the private rental sector.
But almost half of brokers (45%) said they thought their landlord clients would sell all of their properties and exit the market – meaning 72% would be selling off properties if the government were to go ahead with the move.
Just under a quarter of brokers (23%) said that they thought it would make no difference. One in twenty brokers (5%) thought their landlord clients might expand their portfolio.
Landlords face paying National Insurance (NI) on their rental income if plans leaked by HM Treasury over the summer make it into Rachel Reeves’ November budget. The Chancellor believes this extra tax on landlords will raise £.3 billion for the Government – as she struggles to plug a reported £40 billion hole in the nation’s finances.
Rob Stanton, sales and distribution director at Landbay, says:“Rachel Reeves is looking for tax raising measures that will enable Labour to claim it has not broken its election promise to increase VAT, income tax or NI. But she may not raise as much as she expects.
“The amount of tax she expects to raise is based on ONS figures which show that, during the most recent tax year data published (2022/3), some 2.2 million landlords received £27 billion in rental income. I am worried this might backfire though. First, she’s not going to raise that much if a million landlords sell-up, however resilient the sector is in the face of market interference.
“Second, this could drive up rents – as demand for rental property outstrips diminishing supply and remaining landlords look to recoup the cost by raising rents. That could exacerbate the housing crisis for renters.
“If there’s a positive here, given that smaller landlords are the ones most likely to leave the market, this could lead to increasing professionalisation of the private rented sector – and drive moves to limited company structures as landlords look to adapt to the change.”
This article is taken from Landlord Today