New research from mortgage market specialist Pegasus Insight shows that non-HMO landlords spend around 25% of their average gross rental income on running costs, rising to 45% for those operating houses in multiple occupation.

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

Overall running costs include maintenance, servicing, insurance, utilities, professional fees and regulatory compliance.

Average annual expenditure now stands at £19,604 for landlords with non-HMO properties, increasing to £35,720 for HMO landlords. Across the sector, the average buy-to-let portfolio generates gross rental income of £79,000 per year.

The report shows that the main difference in spending patterns between HMO and non-HMO landlords lies in utility costs. Utility bills account for 16% of total expenditure for HMO landlords, more than four times the proportion spent by non-HMO landlords at 4%, reflecting the fact that utilities are more commonly included within rents for HMOs.

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 property standards while meeting an expanding regulatory framework.

PROTECTING MARGINS

Mark Long, founder and director of Pegasus Insight, said: “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 levels of spending do not necessarily result in a better 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.”