Landlords’ operating costs continue to rise in the private rented sector, with maintenance and repairs now accounting for almost 40% of total landlord expenditure in some cases.
This is according to research carried out by mortgage market specialist Pegasus Insight, which found that landlords’ total annual spend was £19,604.
The Landlor Trends Q3 2025 report found that property maintenance and repairs were the largest expense faced by landlords, accounting for between 31% and 39% of total portfolio spend, depending on the property type.
Overall, landlords now spend between 25% and 45% of their gross rental income on operating costs, including maintenance, service, insurance, utilities, professional fees and regulatory compliance, Pegasus Insight found.
And while the total annual expenditure for landlords was £19,604, for those running care homes this rose to £35,720. The research found that the average buy-to-let portfolio generated a gross income of £79,000 per year.
The main difference in the distribution of expenses between HMO and non-HMO landlords was the amount spent on utility bills, which is more than four times higher for HMO landlords (16% versus 4%), who are more likely to include these in the rent they charge.
The findings come despite strong rental yields reported elsewhere in the survey, and underline the increasing cost pressures landlords face as they try to maintain standards and comply with an ever-expanding regulatory framework.
Mark Long, Founder and Director of Pegasus Insight, commented: “Maintenance and repairs have always been one of the key costs for landlords, but what we are now seeing is a step change in scale. Even with returns at their highest point in recent years, a growing proportion of rental income is being absorbed by day-to-day running costs and compliance requirements.
“For many landlords, especially those with older stocks or more complex portfolios, the challenge is no longer generating revenue but protecting margins in the face of rising costs.”
Long added that increased spending did not automatically translate into an improved experience for tenants.
“Our wider research shows that landlords are investing more than ever to keep properties safe, compliant and habitable, but maintenance remains a pressure point in the rental relationship.
“Rising labor costs, supply chain issues and higher tenant expectations make delivering timely repairs more challenging.
“The risk is that continued increases in maintenance costs will ultimately feed through to higher rents as landlords look for ways to finance the ongoing investment needed to keep properties in good condition.”