Maintenance absorbs larger share of rental income
Landlords are spending a growing share of rental income on operating costs, with maintenance and repairs now accounting for up to 39% of total portfolio expenditure, according to new research from Pegasus Insight.
The firm’s Landlord Trends Q3 2025 report found that property maintenance and repairs remained the single largest expense for landlords, representing between 31% and 39% of outgoings, depending on property type.
Across the private rented sector, landlords are now using between 25% and 45% of gross rental income to cover running costs. These include maintenance, servicing, insurance, utilities, professional fees and compliance-related spending.
Average annual expenditure is £19,604 for landlords with non-HMO portfolios, rising to £35,720 for those operating houses in multiple occupation. The typical buy-to-let portfolio generates gross income of about £79,000 a year.
The research indicates that the main difference in cost mix between HMO and non-HMO landlords lies in utilities. HMO operators spend around 16% of total expenditure on energy and other household bills, more than four times the 4% recorded for non-HMO landlords, reflecting the greater tendency to include bills within the rent.
These pressures emerge against a backdrop of strong rental yields reported elsewhere in the Q3 study, suggesting that higher income is being offset by increased spending on upkeep and compliance.
“Maintenance and repairs have always been a core cost for landlords, but what we’re seeing now is a step-change in scale,” said Mark Long (pictured right), founder and director at Pegasus Insight. “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 also pointed out that higher expenditure does not necessarily mean tenants see improvements on the ground.
“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,” he said. “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.”
For mortgage professionals, the findings underline the need to scrutinise landlords’ cost assumptions, particularly for leveraged portfolios and HMO business plans, where higher utilities and maintenance outlays may affect affordability, refinancing strategies and long-term viability.
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