Landlords spend 25% to 45% of rental income on running costs

Landlord research carried out by mortgage market specialist Pegasus Insight shows that running costs continue to rise across the private rented sector, with maintenance and repairs now absorbing close to 40% of total landlord expenditure in some instances.

The latest Landlord Trends Q3 2025 report reveals that property maintenance and repairs remain the single largest cost faced by landlords, accounting for between 31% and 39% of total portfolio expenditure, depending on property type.

Overall, landlords now spend between 25% and 45% of their gross rental income on running costs, including maintenance, servicing, insurance, utilities, professional fees and regulatory compliance.

Average total annual expenditure stands at £19,604 for landlords with non-HMO properties, rising to £35,720 for those operating HMOs. The average buy-to-let portfolio generates gross income of £79,000 per year. The primary difference in spend distribution between HMO and non-HMO landlords is the amount spent on utility bills, which is more than four times higher for HMO landlords (16% vs. 4%) who more commonly include these in the rent they charge.

The findings come despite strong rental yields reported elsewhere in the Q3 research, underlining the growing cost pressures facing landlords as they seek to maintain standards and comply with an expanding regulatory framework.

Mark Long, founder and director of Pegasus Insight, commented: “Maintenance and repairs have always been a core cost for landlords, but what we’re seeing now is a step-change in scale. Even with yields at multi-year highs, a growing share of rental income is being absorbed by day-to-day running costs and compliance demands.

“For many landlords, particularly those with older stock or more complex portfolios, the challenge is no longer generating income, it’s protecting margins in the face of rising costs.”

Long added that higher spending does not automatically translate into an improved experience for renters.

“Our wider research shows that landlords are investing more than ever to keep properties safe, compliant and habitable, yet maintenance remains a pressure point in the rental relationship. Rising labour costs, supply chain issues and higher tenant expectations all make delivering timely repairs more challenging.

“The risk is that sustained increases in upkeep costs ultimately feed through into higher rents, as landlords look for ways to fund the ongoing investment required to keep properties in good condition.”