The introduction of National Insurance on rental income could unintentionally trigger a surge of investment from older landlords according to new analysis from global PropTech firm Reapit.
Under proposals being considered for the 2025 Budget, landlords may become liable for National Insurance contributions (NICs) on their rental income.
However, those above State Pension age are exempt from paying National Insurance – a distinction that could see older investors enjoy significantly higher post-tax yields than their younger counterparts.
Reapit suggests that while recent market entrants have largely been younger investors and millennial-led incorporations, the greatest opportunity following any tax shift may lie with retirees seeking stable income and long-term capital appreciation.
EXPERIENCED INVESTORS
The move, the firm argues, could rebalance the buy-to-let market toward more experienced investors, particularly those with larger portfolios who are better positioned to absorb regulatory and financial pressures.
According to the English Private Landlord Survey 2024, 77% of landlords with five or more properties are aged 55 or over, and these landlords are more likely to use professional letting agencies.
For estate and letting agents, this could represent a valuable growth segment.
RETIREMENT OPTION
Dr Neil Cobbold, Commercial Director at Reapit, says the exemption could make buy-to-let investment more attractive to retirees.
He adds: “Older investors could benefit from higher net yields if the National Insurance exemption remains in place.
“For agencies, the challenge and opportunity lie in identifying and engaging this demographic, supporting them to expand portfolios beyond their local markets.”
Cobbold says that agencies with integrated sales and lettings operations are best placed to serve both younger entrants and older portfolio landlords, using data and technology to match investors with properties that deliver the strongest rental yields across the UK.
