UK landlords are increasingly allocating a significant portion of their rental income to cover rising operational costs, with non-HMO landlords spending around 25% and HMO operators close to 45% of their gross rental income on portfolio expenses. This trend highlights the growing financial pressures on landlords, particularly regarding maintenance, repairs, and compliance, which are impacting profit margins and rental pricing strategies.

Rising Maintenance and Running Costs

Research from Pegasus Insight reveals a substantial increase in the share of rental income absorbed by maintenance and repairs, now accounting for between 31% and 39% of overall expenditure for landlords. The firm’s Landlord Trends Q3 2025 report shows that average annual costs have reached £19,604 for standard buy-to-let property owners, while landlords managing Houses in Multiple Occupation (HMOs) face even higher costs, averaging £35,720 per year.

Mark Long, founder and director of Pegasus Insight, comments that maintenance and repairs have always been a core cost for landlords but are now experiencing a “step-change in scale.” Despite multi-year high rental yields, a growing share of rental income is being absorbed by day-to-day running costs and compliance demands. For landlords with older or more complex portfolios, the challenge is increasingly about protecting margins rather than simply generating income.

Challenges in Delivering Timely Repairs

Higher spending on maintenance does not necessarily improve the tenant experience, warns Mr Long. Landlords are investing more than ever to keep properties safe, compliant, and habitable, yet maintenance remains a pressure point in landlord-tenant relationships. Factors such as rising labour costs, supply chain issues, and increased tenant expectations make delivering timely repairs more difficult.

This situation often results in landlords raising rents to fund the ongoing investment required to maintain property standards. The balance between meeting tenant expectations and managing costs is becoming increasingly delicate, particularly as regulatory compliance continues to intensify.

Impact of Utilities and Compliance on Costs

The research indicates that the average landlord portfolio generates around £79,000 annually before deductions. For non-HMO landlords, nearly £20,000 of this income is absorbed by everyday running costs. The higher expenditure for HMO landlords is largely driven by utilities, which account for 16% of costs—more than four times the 4% seen in non-HMO portfolios where bills are typically not included.

Landlords also report that older rented homes require constant attention, and the compliance burden has increased nationwide. Additional pressures come from rising professional fees, servicing contracts, and insurance premiums, which further reduce the financial flexibility landlords have when facing major repairs or unexpected expenses.

Implications for UK Landlords and Agents

These findings underscore the importance for landlords and letting agents to carefully manage operational costs and maintain a clear understanding of their portfolio’s financial health. With maintenance and compliance costs rising, landlords may need to review rent levels, budgeting strategies, and property management approaches to sustain profitability.

Understanding the breakdown of costs, particularly the impact of utilities in HMOs and the growing compliance requirements, can help landlords make informed decisions about investment and property upkeep. Agents can also play a crucial role in advising landlords on cost management and tenant relations to navigate these challenges effectively.

Looking Ahead: Support for Landlords

In response to these ongoing challenges, The Landlord Association (TLA) is launching a new Trusted Partners Hub in Q1 2026. This initiative will feature verified and approved service providers selected to support landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other service providers are invited to register their interest to become TLA service partners, providing landlords with trusted resources to manage rising costs and compliance demands.