Landlords are spending a growing share of rental income on running their properties as maintenance and compliance costs rise across the private rented sector, new research suggests.
Pegasus Insight’s latest Landlord Trends report for the third quarter of 2025 shows total operating costs now account for between 25% and 45% of gross rental income, depending on portfolio type.
The figures cover day-to-day spending on maintenance, servicing, insurance, utilities, professional fees and regulatory compliance.
Maintenance and repairs remain the single largest expense, absorbing between 31% and 39% of total landlord outgoings.
HIGHER EXPENDITURE
The report indicates that escalating repair costs, ageing stock in some regions and higher expectations around property standards are combining to push routine expenditure higher, even as headline rental yields remain strong.
Average annual running costs now stand at £19,604 for landlords with non-HMO properties, rising to £35,720 for those operating houses in multiple occupation.
The typical buy-to-let portfolio generates around £79,000 a year in gross rental income.
A key point of divergence between the two landlord types is utility spending. HMO landlords spend more than four times as much of their total outgoings on utilities – 16% compared with 4% for non-HMO landlords – as they are more likely to include bills within the rent.
The findings highlight an increasingly complex rental market in which higher nominal rents do not automatically translate into improved net returns.
Landlords are facing upward pressure from stricter regulatory obligations, energy efficiency expectations and insurance costs, alongside rising material and contractor prices for maintenance work.
STEP-CHANGE UNDERWAY
Mark Long (main picture), Founder and Director of Pegasus Insight, says: “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.”
INVESTING MORE
And he adds: “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.”
