House prices could take a hit and rents soar if Labour acts on plans to clobber landlords with even more taxes, experts have warned.
The property market is already grinding to a halt as buyers and sellers brace themselves for the Chancellor’s Autumn Budget.
And now yet another rumour has surfaced regarding Rachel Reeves’ intention to crank up the taxes paid by property owners.
She is considering charging landlords National Insurance on the money they make from rent.
Rachel Reeves is rumoured to be considering National Insurance for landlords in the Budget
It is predicted that more landlords will decide to exit the market if they are required to pay the levy on money they make from rent
With many landlords already selling up in response to previous tax increases and the prospect of harsher regulation under the Renters’ Rights Bill, it would be another hammer blow to the sector – and could also drive up rents for tenants.
‘I have already spoken to two landlords this morning who are asking, “What’s the point?”‘ says north London estate agent Jeremy Leaf. ‘This could have the effect of compromising the market.’
Michelle Lawson, director at Fareham-based mortgage broker Lawson Financial, adds: ‘Landlords are no longer wealthy, saving for a deposit is getting harder, unemployment is rising – this is creating the perfect storm.
‘Any further steals from landlords will just further fuel rent increases.’
The change, reported by The Times, is the latest of a series of worrying property market tax proposals which have been floated by the Treasury ahead of the Budget.
This includes replacing stamp duty with an annual tax for those who own homes worth £500,000 or more, charging capital gains tax when people sell homes worth £1.5million or more, and changing the gifting rules which could make it harder for parents to give children a house deposit.
It is not known whether any, or all, of these propositions will make it into the final Budget, which will be held in October or November.
But property experts warn they are already causing turmoil in the market, as buyers and sellers try to rush through or stall house moves.
If the changes are enacted, they say it could send the market into a tailspin with landlords selling, rents soaring and the homeowner market taking a confidence hit.
Some even go as far as saying they could turn Britons off property altogether – especially landlords who might see alternative investments as an easier bet.
‘The British love affair with property could be tested to destruction,’ says Sarah Coles, head of personal finance at investment firm Hargreaves Lansdown, who points out that investing in property as landlord is already less tax-efficient than stocks and shares.
‘Buying a home has never been trickier, selling a home could become more expensive and buying second homes is starting to make less sense financially,’ says Ben Perks, managing director at Stourbridge-based Orchard Financial Advisers.
‘There is a real risk that the property market could come to a grinding halt.’
Landlords to be hammered – and rents will rise
National Insurance could be levied on rental income at the same rate as workers are charged on their salary, according to the reports.
The tax is not charged on the first £1,048 you earn per month, but you pay 8 per cent between £1,048.01 per month and £4,189 per month, and 2 per cent above that.
Rental income would likely be added to other earnings including salary to calculate the tax bill, so most landlords would be forced to pay.
It could see the total bill for a basic rate tax paying landlord earning £10,000 of rental profit in a year rise from £2,000 to £2,800 on the rental income alone.
This adds to a slew of extra taxes and regulations for landlords over the last decade, and experts say it could be the final straw for some.
I have already spoken to two landlords this morning who are asking, ‘What’s the point?’
Jeremy Leaf, estate agent
In October, the Government added a 2 per cent stamp duty surcharge on top of the extra 3 per cent landlords already pay when they buy properties – adding thousands of pounds to the cost.
And the Renters’ Rights Bill, which is on course to become law either this year or in early 2026, will put an end to section 21 ‘no fault’ evictions and restrict landlords to one rent increase a year.
They also face having to sign up to a national landlord database that will be visible to councils and tenants, as well as a possible future requirement that their properties reach an energy-performance certificate rating of C by 2023.
But it is not just landlords who will be affected. If Labour went ahead with this plan, experts say it could push up rents – which have already soared in recent years.
If there are fewer properties to rent, this usually drives up the cost because of greater competition for each available home, meaning the remaining landlords can charge more. Landlords who do remain may simply increase rents to cover the National Insurance.
The average private rent in the UK was £1,343 in July 2025, up 5.9 per cent compared to the previous year, according to the Office for National Statistics.
Rightmove says average rents on new tenancies grew by £400 per month between 2020 and 2025, rising 44 per cent compared to a 36 per cent increase in average wages.
Tom Bill, head of UK residential research at estate agent Knight Frank, says: ‘Targeting landlords won’t lose the Government many votes, but such moves invariably end up hurting tenants.
‘With landlords already selling up ahead of the Renters’ Rights Bill and tougher green regulations, another disincentive would reduce the supply [of homes] further and put upwards pressure on rents.’
This could drive landlords away to such an extent that it would reduce the tax take for the Treasury.
Timothy Douglas, head of policy and campaigns at estate agent body Propertymark, says: ‘Further tax imposition will mean less revenue for the Exchequer because it will drive landlords away from the market.’
Property market stalls on tax fears
Given the series of proposals to hike property taxes, experts say the home sales market is grinding to a halt – with the Budget still at least a month away.
One plan that officials are reportedly poring over is replacing stamp duty with an annual national property tax for homes worth more than £50,000, along with council tax changes.
In its house-price index released yesterday, property website Zoopla said: ‘Speculation over the removal of stamp duty replaced by a new annual property tax for homes over £500,000 may make some buyers consider a “wait and see” strategy.
‘This covers those who may possibly save money on purchases under £500,000, and concern those buying over this level as well.’
Another idea that could be under consideration is a change to capital gains tax when someone sells their home and makes a profit, if their property is worth more than £1.5million, which is being dubbed a ‘mansion tax’.
David Stirling, independent financial adviser at Belfast-based Mint Wealth, says: ‘Rachel Reeves is driving a bulldozer into the property market with these proposed changes.
‘The changes to stamp duty and capital gains tax don’t seem thought through, more a madcap reaction to her panic at the impending fiscal black hole.’
Fewer people moving can lead to low house price growth, as there isn’t as much competition between rival buyers to drive them up.
And estate agents say they are already seeing this effect on the ground. ‘Even the rumour of change can be enough to put people off,’ says Jeremy Leaf.
‘Buyers may be wondering why they should pay stamp duty now if they won’t have to after the Budget if changes are introduced. This could have the effect of compromising the market.’
For the home-mover market, changes to capital gains or stamp duty could make people less likely to move – especially in the short term as they get to grips with the new tax regime.
‘The package of rumoured property tax changes looks less like reform and more like a raid on wealth,’ says Pete Mugleston, managing director at Derby-based Online Mortgage Advisor. ‘It would be a huge shift in how property is treated in the UK.’
‘The danger is that it plays well politically in the short term but ends up shrinking the tax base and damaging sentiment in the housing market long term.’
Speculation is hitting house prices
House-price growth has been sluggish in the past year, with the average home going up by 2.4 per cent in the 12 months to July according to Halifax.
Some areas have fared worse though, with London seeing just 5 per cent growth on the year.
Knight Frank’s Bill thinks the rumours of tax rises could mean they slow even further between now and the Budget.
‘Supply could rise as landlords decide the latest National Insurance proposal is a disincentive too far and other owners accelerate their plans due to the capital gains tax rumours.
‘In what was already a buyer’s market, I expect any downwards pressure on prices will intensify between now and the Budget.’
Price falls? One expert believes house-price growth in London could fall into negative territory
Jonathan Hopper, buying agent at Garrington Property Finders, also thinks short-term speculation will drag on prices.
‘The biggest thing people fear at the moment is getting it wrong – and that can lead to paralysis,’ he says.
He believes the tax-rise rumours are currently having an even bigger impact on the housing market than the recent reduction in interest rates by the Bank of England – especially in London and the South East.
‘We’re in a world where people who are landlords or family movers don’t have clarity or confidence.
‘The market hasn’t quite stalled, but there is a definite step on the brakes, and it will be a slower September and October until we get to the Autumn Budget.’
Annual house-price growth for 2025 as a whole is set to be just 1 per cent, according to a Savills forecast from July.
Hopper says this growth is likely to be ‘dragged back’ slightly by the speculation alone, but if the stamp duty and capital gains tax changes go through he forecasts falls in property prices in London.
‘In parts of London there are price falls already, in some cases returning to 2014 levels,’ he says. ‘The compound effect of those tax changes would be something that could tip the balance.’