Landlords are allocating between 25% and 45% of their rental income to running costs as maintenance and compliance bills climb, according to research by mortgage market specialist Pegasus Insight.
The Landlord Trends Q3 2025 report highlights that property maintenance and repairs remain the single largest cost for landlords, accounting for 31% to 39% of total portfolio expenditure depending on property type.
Overall annual running costs average £19,604 for non-HMO landlords and £35,720 for HMO landlords, whose higher outgoings are partly driven by utility bills, which typically make up 16% of expenditure compared with 4% for non-HMOs.
Across all landlords, running costs include maintenance, servicing, insurance, utilities, professional fees, and regulatory compliance. These figures come despite strong rental yields elsewhere in the research, underlining that rising costs continue to squeeze margins even when income remains robust. The average buy-to-let portfolio generates around £79,000 in gross rental income annually.
“Maintenance and repairs have always been a core cost for landlords, but what we’re seeing now is a step-change in scale,” said Mark Long, founder and director of Pegasus Insight. “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 noted that increased spending does not necessarily improve the tenant experience. “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.”
