Running a rental property is taking an increasingly larger share of a landlords' rental income, research reveals.
The analysis from Pegasus Insight puts average annual running costs at £19,604 for non-HMO homes and £35,720 for HMOs.
It says that non-HMO landlords spend 25% of average gross rental income on routine outgoings, while those with HMOs spend 45%.
Landlords hit by maintenance costs
Repairs and maintenance account for between 31% and 39% of all portfolio outgoings depending on the type of property, making it the single largest expense.
Utilities also shape the gap, reaching 16% of HMO spend while it is 4% for non-HMO portfolios offering bills included.
The typical portfolio generates about £79,000 a year in gross income, the firm's landlord trends report reveals. And with yields at all-time highs, the rising costs of labour, insurance, servicing and compliance means profitability is being squeezed.
Landlord costs are rising
The director and founder of Pegasus Insight, Mark Long, said: "Maintenance and repairs have always been a core cost for landlords, but what we're seeing now is a step-change in scale.
"A growing share of rental income is being absorbed by day-to-day running costs and compliance demands."
He added: "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."
Mr Long added that higher spending doesn’t automatically translate into an improved experience for renters.
Investing to make homes safe
He continued: "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."
Mr Long adds: "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."
RRA will push up rents
The news from Pegasus coincides with recent research from two leading PRS firms.
Jackson-Stops predicts 2026 will see rent increases as the Renters' Rights Act comes into force on 1 May brings more outgoings.
Sarah Leslie, a lettings manager for the firm in Sevenoaks, says last year saw landlords selling because of rising costs.
She said: "While rents have remained robust throughout 2025, we are seeing clear price sensitivity among tenants.
"Although some landlords have chosen to sell this year, this cannot be attributed solely to the forthcoming implementation of the Renters’ Rights Act or proposed EPC changes.
"Rather, it reflects the cumulative impact of regulatory and cost pressures over the past decade."
Landlords pass on costs
Also, the government's Autumn Budget means tenants will see higher rents and there will be a landlord sell-off, one analysis reveals.
Knight Frank warns that the two-percentage point rise in a landlord’s rental income tax will push up rents.
The firm’s Tom Bill said: "As the tax burden on landlords increases, more will sell, supply will fall and rents will rise.
"For those landlords that remain in the sector, any extra costs may need to be passed on."
Careful budgeting for student landlords
Simon Thompson, the managing director of Accommodation for Students, said: "Student landlords are facing the same rising maintenance bills as the rest of the sector, but with the added pressure of void periods and higher tenant turnover.
"Many landlords rely on the summer months to carry out major works and those jobs now cost far more than they did even three years ago."
He added: "The Renters' Rights Act will alter how flexible landlords can be with possession and that will make careful budgeting essential for anyone in the student niche."
