Landlord research carried out by mortgage market specialist Pegasus Insight reveals deep anxiety in the buy-to-let sector ahead of next Wednesday’s Budget, with widespread concern that further tax increases could accelerate landlords’ withdrawal from the Private Rented Sector.
According to the firm’s latest Landlord Trends Q3 2025 report, the proposed 8% National Insurance (NI) charge on rental income has become landlords’ number one concern, with more than eight in ten (81%) describing it as ‘very concerning’.
Nearly three quarters (73%) say they are very concerned about potential changes to Capital Gains Tax (CGT) on property sales, rising to 85% among those who have sold or intend to sell property in the coming year.
The findings follow evidence that 40% of landlords plan to sell at least one property in the next 12 months, while only 7% plan to buy, signalling the continuation of a supply squeeze that has already driven rents to record highs.
Mark Long, founder and director of Pegasus Insight, comments: “The tax burden is now seen by landlords as every bit as threatening as regulation. The possibility of a new National Insurance charge on rental income is causing alarm across the sector, not just because it would erode profitability, but because it would further undermine confidence in what has already become a heavily taxed form of investment.
“Many landlords feel that another policy shock, on top of CGT and the Renters’ Rights Act, could tip the balance and force them to sell.”
Long adds that the cumulative impact of new taxes could have damaging consequences for both landlords and tenants.
“Every indication from our data is that a growing number of landlords are reassessing their position. If the November Budget adds yet another layer of taxation, we can expect more to exit the market in 2026, further reducing rental supply at a time of rising demand.
“The government needs to tread carefully — short-term revenue gains could come at the expense of long-term housing stability.”
Meanwhile Joseph Lane, the founder and director of HMO and buy-to-let brokerage Mortgage Lane, is the latest industry figure to give his views ahead of the Budget.
He says: “Even in the changing tax environment, HMOs and HMO mortgages remain one of the most resilient parts of the private rental sector. Tenant demand for affordable shared accommodation continues to grow while specialist lenders are increasingly tailoring products to professional landlords. A stable interest rate environment and yield-based valuations mean experienced HMO owners are well placed to weather the policy changes.
“That being said, landlords must continue to navigate the tightening of local rules, such as Article 4 Directions, licensing schemes and EPC requirements. Those operating in councils with clearer or more supporting frameworks will see the greatest stability in returns.
“Talk of replacing stamp duty with a more progressive property tax has gathered pace over recent weeks, alongside speculation around council tax revaluations or additional charges on higher-value properties and homes. If implemented carefully, these changes may reduce the friction of buying and selling, allowing landlords to restructure their portfolios more efficiently.
“However, a move toward ongoing annual property levies would raise operating costs, particularly for larger HMOs or higher value London properties. Regional investors may therefore benefit if Rachel Reeves measures encourage a shift of capital north, where entry prices and yields remain much more attractive.
“There is speculation that National Insurance could be applied to rental income as a way to align investment and earned income taxation. For smaller landlords, this could mark a significant blow to profitability, yet for professional landlords operating HMOs with higher yields, the impact could be more manageable.
“With widespread talk of limiting tax-free gifting and freezing inheritance tax thresholds, landlords are understandably nervous. A cap on lifetime gifts could make it harder for parents to help their children and relatives onto the property ladder or to transfer property portfolios. For investors, proactive succession planning – through company structures or phased transfers – will become increasingly important.
“As a sector, we’ve learned to thrive amid constant changes and rules, and while the Autumn Budget will undoubtedly bring new pressures, there is also opportunity. Stable interest rates, strong demand from tenants and growing lender competition continue to make HMO properties a viable long-term investment.”
This article is taken from Landlord Today