Chancellor Rachel Reeves is considering a fresh tax raid on landlords, a leading property figure has claimed.

This could include adding National Insurance to rental income, adding separate tax bands for rental property earnings or putting VAT on residential lettings as Reeves seeks to fill a growing fiscal black hole without breaking manifesto pledges.

David Alexander (pictured), chief executive officer of DJ Alexander Scotland, has made the claims, warning that targeting landlords would make the housing crisis worse at a time when demand is at unprecedented levels and investment remains on hold due to uncertainty over future returns.

The speculation follows comments from Nick Williams, a former No 10 aide, who told The Times newspaper that “taxes will have to go up” as the Chancellor weighs up his plans ahead of a spending review on June 11.

Alexander says: “Once again, landlords and property investors are being seen as easy targets for raising finance for the Government. The problem the government has is that landlords and property investors can simply exit the market.”

Tax experts suggest Reeves has three main options for raising revenue from the rental sector:

National Insurance

The first would be to force landlords to pay National Insurance on rental income, aligning them with self-employed workers by charging 6% on profits between £12,570 and £50,270, and 2% on higher amounts.

However, this would be complicated as many landlords are near or past the state pension age when National Insurance typically ends. This would therefore create a complex two-tier system where younger landlords face charges while older ones would not.

Separate rental tax band

Currently, the first £1,000 of rental income benefits from a property allowance with additional income taxed at standard rates. Couples often minimise tax by allocating income to a non-working partner’s personal allowance. A dedicated rental tax band could be introduced to close the loophole.

VAT on lettings

The third option would be to subject rent to 20% VAT, although Alexander warns that this would inevitably be passed straight on to tenants at a time when affordability is already stretched.

The Government should be working with the sector to make it more attractive to invest.”

Alexander concludes that this comes: “At a time when demand is unprecedented, when tenants are facing delays in finding appropriate homes, and when property investment is being put on hold due to uncertainty over future returns, this is not the time to make the market more difficult for landlords.

“Instead, the Government should be working with the sector to make it more attractive to invest, to grow the market, and to improve investment conditions for landlords and property investors.”