Imposing new taxes on landlords in the private rented sector would risk undermining the government's ambitions for economic growth and social mobility, the National Residential Landlords Association warns.
The NRLA is urging ministers ahead of the Autumn Budget to acknowledge the vital role the PRS plays in supporting economic opportunity and labour mobility.
With around 11 million people renting in England, the organisation says the sector helps individuals move for work, education and training, forming a critical part of the nation's economic infrastructure.
Budget must support landlords
The NRLA's chief executive, Ben Beadle, said: "The private rented sector is a significant driver of labour and social mobility.
"It enables people to move for work, access higher education, and seize new opportunities – everything the government wants to promote as part of its growth agenda.
"Instead, landlords are facing yet more speculation about tax hikes that would hinder investment, reduce supply, and ultimately drive-up rents."
He added: "The Chancellor must use this critical Budget to back responsible landlords who provide good homes and support local economies.
"That means using the tax system to encourage long-term investment, as opposed to prioritising short-term revenue grabs."
PRS is crucial
The NRLA says that small and medium-sized landlords help sustain nearly 400,000 jobs nationwide.
Aldermore Bank research reveals that landlords spend an average of £6,000 every year on local trades and services, with almost 80% hiring nearby tradespeople.
However, the number of homes for rent remains tight with Zoopla data showing supply is 10% lower than in 2019, even as tenant demand has jumped 23%.
Economics expert Paul Johnson also says that increasing landlord taxes will lead to higher rents and fewer homes in the PRS.
NI Contributions will hit younger landlords hardest
Meanwhile, Hamptons' latest Budget analysis suggests one reform gaining traction inside government could see landlords paying National Insurance Contributions (NICs) on rental profits.
At present, those letting property in their personal name pay income tax but no NICs.
The proposed change would mirror employment income, applying NICs at 8% up to £50,270 and 2% thereafter.
Most landlords affected
Early modelling shows that a typical landlord earning £16,478 in rental income with £7,875 in mortgage interest could see their tax bill more than double, rising from £699 to £1,609.
A higher-rate taxpayer's liability would increase from £2,973 to £3,200, leaving just £295 in profit.
The proposal would mainly affect personal landlords under pension age, who make up roughly 80% of the buy to let market.
Around one-third of landlords, being over state pension age, would be exempt, as would incorporated landlords operating through limited companies.
Pay tax when making a loss
Hamptons says that the definition of 'profit' will be key.
That's because if NICs are levied before mortgage interest deductions, many landlords could end up paying tax on loss-making properties.
Lower-income landlords and those with high borrowing costs would be particularly vulnerable.
Originally proposed by the Resolution Foundation, the reform was estimated to raise up to £3 billion annually.
But Hamptons calculates a more realistic figure closer to £1 billion once exemptions are accounted for.
BTL profitability squeezed
The report warns: "The Autumn Budget may not end up delivering sweeping housing reform, but the ideas currently in circulation suggest a shift in thinking.
"From taxing rental income more like employment earnings to rethinking how we value and tax homes, the direction of travel is clear.
"Each proposal carries trade-offs.
"NICs on rental income could squeeze buy to let profitability and reduce rental supply further, while CGT on high-value homes risks dampening activity at the top end of the market and reducing mobility for those looking to downsize."
Risk losing student landlords
Simon Thompson, the managing director of Accommodation for Students, said: "The private rented sector isn't just about homes, it's about enabling opportunity.
"Students rely on the flexibility and accessibility that good landlords provide, and every extra tax burden risks making that harder to sustain."
He added: "Adding National Insurance charges to rental income means that landlords with higher borrowing costs and tighter margins will feel the squeeze first.
"If profitability erodes, we risk losing the very landlords who've kept the student market moving through some of its toughest years."
