Costs of Being a Landlord in the UK – What You Need to Know

Thinking about becoming a landlord? While rental income can seem attractive with UK average monthly rent at £794, and in London a whopping £1,665, the reality is far more complex. One in eight prospective landlords underestimates all the costs that come with buying to let – by as much as £8,359 a year.

Don’t let yourself become another statistic. Whether you’re considering your first buy-to-let property, inheriting a rental property, or looking to expand your portfolio, understanding the true costs of being a landlord will help you make informed decisions and avoid financial pitfalls.

This comprehensive guide breaks down every cost you’ll face as a landlord, from obvious expenses to hidden ones that catch many by surprise.

What Are Landlord Costs?

Not all landlords chose to have a buy to let property – some were thrown in at the deep-end with the financial crisis years ago. Others may have inherited property and fancy the idea of receiving a decent rental sum every month, but there’s far more involved in being a landlord than that.

Landlord costs fall into several categories:

Upfront Costs: Purchase expenses, deposits, legal fees, and initial setup
Legal and Compliance Costs: Safety certificates, licenses, and mandatory requirements
Ongoing Operational Costs: Mortgage, insurance, management fees
Variable Costs: Maintenance, repairs, void periods, and tenant-related expenses
Tax Obligations: Income tax, stamp duty, and accounting costs

Getting a clear picture of these costs is essential because the average UK landlord now spends £1,374.07 per year on maintenance—£285 more per year compared to 2022, and that’s just one category of expenses.

Upfront Purchase Costs vs Ongoing Costs

What Are Upfront Purchase Costs?

Upfront purchase costs are the one-time expenses you’ll face when buying a rental property. These are significantly higher for buy-to-let properties compared to residential purchases.

When you’ll face upfront costs:

Buying your first rental property
Expanding your property portfolio
Converting an existing property to rental use
Taking over inherited property that needs compliance work

Key features:

Much higher deposit requirements (usually 20-25% minimum)
Additional stamp duty surcharge for second properties
Higher mortgage arrangement fees and interest rates
Legal and survey costs

What Are Ongoing Operational Costs?

Ongoing operational costs are the regular expenses you’ll face throughout your time as a landlord. These include both predictable monthly costs and variable expenses that can fluctuate significantly.

When ongoing costs apply:

Every month you own a rental property
Whether the property is occupied or vacant
Regardless of rental income levels
Throughout the entire period of ownership

Key features:

Monthly mortgage payments (typically higher interest than residential)
Annual safety certificates and compliance requirements
Insurance premiums and management fees
Unpredictable maintenance and repair costs

Do I Need to Budget for All These Costs?

You Need a Comprehensive Budget If:

You’re buying your first rental property
You want to maintain legal compliance and avoid penalties
You’re planning to generate consistent profit from rental income
You want to protect yourself from unexpected financial strain
You’re considering professional property management

You Can Reduce Some Costs If:

You’re comfortable with self-management instead of using agents
You have DIY skills for basic maintenance (though be cautious)
You choose newer properties that require less maintenance
You’re selective about tenants to reduce damage and disputes
You buy in areas with lower compliance requirements

You Must Budget for Legal Costs If:

You own any rental property in the UK
You want to avoid prosecution for non-compliance
Your property has gas appliances, electrical systems, or requires licenses
You handle tenant personal data (almost all landlords)

What Costs Should Be Included in My Budget?

Legal and Compliance Costs (Non-Negotiable)

Safety Certificates:

Gas safety certificate: £45 per year (annual requirement)
Energy Performance Certificate: £65 every 10 years
Electrical Installation Condition Report: £199 every 5 years (England)
Smoke and carbon monoxide alarms: £30 (one-time plus replacements)

Registration and Licensing:

Registration: In Scotland, the cost is currently £65 plus £15 for every additional property
ICO registration: £40, and you’ll have to renew it every year
HMO licence: In Edinburgh, this can range from £540 (for three tenants) to £900 (for five tenants)

Tax Obligations:

Stamp Duty Land Tax with additional surcharge for second properties
Income tax on rental profits (20%, 40%, or 45% depending on total income)
Accounting and self-assessment costs

Purchase and Financing Costs

Buy-to-Let Mortgages:

Deposit: Usually 20-25% minimum (vs 5% for residential)
Arrangement fee: 1%–2% on average of your mortgage, or £1,504 on average as a flat fee
Booking fees: £99 and £250
Valuation fees: Usually £150 or more
Higher interest rates than residential mortgages

Legal and Professional Fees:

Solicitors’ fees: £850 and £1,500
Survey costs for detailed property inspection
Stamp duty with additional 3% surcharge for second properties

Ongoing Operational Costs

Insurance:

Buildings insurance: average £111.83 a year
Insurance costs start from £16 per month amounting to around £192 per year
Additional landlord insurance for liability and rental income protection
Contents insurance for furnished properties

Management and Administration:

Letting agent fees: between 8 – 14% of the monthly rental income
Average fees tend to range between 10-20% of monthly rent plus VAT
Tenant finding services if self-managing
Tenant acquisition: around £50 for online advertising
Tenant referencing: start at £20

How Much Should I Budget for Maintenance?

Setting Realistic Maintenance Budgets

Current Market Reality: Property maintenance costs have soared by 26.24% since 2022, making accurate budgeting more crucial than ever.

Average Annual Costs:

UK landlords spend an average of £765 a year on maintenance
Research suggests you should save 1% of your property’s value for maintenance costs
This is an average cost of £2,344 across the country – much higher in expensive areas like London

Most Expensive Repairs:

Roof damage – £906 on average (needed once every three years)
Electrical issues – £665 annually (at least once a year)
Heating problems – £655 annually (at least once a year)

What Affects Maintenance Costs

Property Age and Size:

Larger the property, the more it costs to run
Older houses are more expensive to maintain because they often have old-fashioned features which aren’t as cheap to repair

Damage and Wear: The average cost of repairing damage has skyrocketed by 121%, from £473 in 2022 to £1,043 in 2024

Most expensive damage causes:

Theft damage – £1,128 per year
Fire damage
Heat and weather-related damage

Common Mistakes to Avoid

Underestimating Total Costs

Don’t Assume Low Ongoing Costs:

Many new landlords focus only on mortgage payments and rent income
Confession time! I’m going to make a shameless confession before I go any further: before I became a landlord, I had no real idea what the associated costs were
Factor in all categories: legal, operational, maintenance, and tax costs

Don’t Ignore Regional Variations:

Edinburgh emerging as the most expensive city for maintenance, followed by Newcastle and Glasgow. London, once the costliest city for landlords, has now dropped to sixth place

DIY Repairs Gone Wrong

The DIY Trap: 53% of UK landlords have attempted to fix property damage themselves, yet 43% regret it due to poor results, further damage, or tenant complaints. Alarmingly, 46% of landlords who tried DIY solutions later had to pay professionals to redo the work, often at a higher cost

When to Use Professionals:

Gas, electrical, and structural work
Major plumbing repairs
Anything affecting tenant safety
Work that requires certification

Missing Legal Requirements

Common Oversights:

Forgetting annual gas safety checks
Not registering with ICO for data protection
Missing local licensing requirements
Inadequate insurance coverage

Legal Consequences:

Prosecution and fines for safety violations
Inability to serve eviction notices without proper certificates
Personal liability for accidents

Where to Get Cost Estimates

Professional Services

Mortgage and Financial Advice:

Independent mortgage brokers for buy-to-let options
Accountants for tax planning and compliance
Property investment advisors for market analysis

Property Services:

Local contractors for maintenance cost estimates
Property management companies for service comparisons
Insurance brokers for comprehensive coverage quotes

Online Resources

Cost Calculators:

Stamp duty calculators for purchase costs
Rental yield calculators including all expenses
Mortgage calculators specifically for buy-to-let

Market Research:

Local rental market analysis
Property price trends in your target area
Comparative management fee analysis

Getting Professional Help

When to Consider Expert Advice:

First-time landlords unfamiliar with requirements
Complex tax situations or multiple properties
Properties requiring significant compliance work
High-value properties with substantial risks

What Happens When Costs Spiral?

Void Periods – The Silent Killer

Impact of Vacant Properties: Obviously, a vacant property means zero rental income. Hard to anticipate, a void period could be as little as a week or could go on for many months

Ongoing Costs During Voids:

The average Band D council tax in England for 2024-25 is £2171 (approximately £180 monthly)
Mortgage payments continue
Insurance premiums
Utility costs if not transferred

Tenant Disputes and Legal Costs

Rising Disputes: Nearly 60% of landlords have had disagreements with tenants over maintenance, a sharp rise from 48.5% in 2022

Legal and Eviction Costs:

Professional legal advice
Court costs and bailiff fees
Lost rental income during proceedings
Property damage that exceeds deposits

Emergency Repairs

Unexpected Major Expenses:

Boiler replacement (£2,000-£4,000)
Roof repairs (£3,000-£10,000+)
Major plumbing emergencies
Electrical system upgrades

Protecting Yourself:

It’s essential to have a financial buffer to cover mortgage payments, council tax, and other ongoing expenses during these periods of vacancy
Comprehensive insurance coverage
Regular property maintenance to prevent emergencies
Professional property management for quick response

Tax and Financial Considerations

Income Tax on Rental Profits

Tax Rates for 2024/25: Personal Allowance: £0-£12,570 (0%), Basic Rate: £12,571-£50,270 (20%), Higher Rate: £50,270-£125,140 (40%), Additional Rate: Above £125,140 (45%)

Mortgage Interest Relief Changes

Section 24 Changes: Mortgage interest is no longer deductible but you can claim back up to 20% of the mortgage interest back in tax relief

This has significantly impacted landlord profitability, especially for higher-rate taxpayers.

Professional Tax Advice

Accounting Costs:

For this service, you can expect prices to start from around £220 per property
Starting April 2026, landlords who file a self-assessment will be required to submit financial reports quarterly

Allowable Expenses: Many landlord costs are tax-deductible, including:

Maintenance and repairs
Insurance premiums
Management fees
Safety certificates
Professional fees

Regional Cost Variations

Location-Specific Expenses

Highest Maintenance Costs: Edinburgh emerging as the most expensive city for maintenance, followed by Newcastle and Glasgow

Licensing Requirements:

In Edinburgh, landlord registration costs £80 plus £18 for each property
Different HMO licensing requirements across regions
Varying local authority requirements

Market Factors:

Property values affecting insurance costs
Local contractor pricing
Demand affecting void period risks

Annual Cost Summary: What to Expect

Based on our research, here’s what you can realistically expect to spend annually per property:

Mandatory Annual Costs

Gas safety certificate: £45-£60
ICO registration: £40
Buildings insurance: £112-£192
Income tax: Varies significantly based on income and property profits

Variable Annual Costs

Maintenance and repairs: £765-£1,374+ (and rising)
Management fees: 8-14% of rental income (if using agents)
Void periods: Highly variable but potentially several months of costs
EPC (amortized): £6.50 per year
EICR (amortized): £40 per year

Total Estimated Annual Costs

Self-managed property: £2,000-£4,000 Agent-managed property: £3,500-£6,000+
High-maintenance/older properties: £4,000-£8,000+

These figures exclude mortgage payments, which will be your largest regular expense.

Building Your Contingency Fund

The Importance of Emergency Funds

One of the biggest mistakes most new landlords make is that they don’t put measures in place to deal with unforeseen expenses. Being financially ill-prepared can literally cripple a landlord’s business and cashflow

Recommended Reserves

Minimum Contingency:

6 months of mortgage payments
1% of property value annually for maintenance
Additional buffer for major repairs (boiler, roof, etc.)

Building Your Buffer: If you’re able to make profit every month after paying all your expenses, don’t be tempted by the devil – don’t grab and run with all of what remains. Leave a percentage in there every month, and allow it to build up

Learning from Experience

Cost Reduction Through Knowledge

It’s also worth noting that being a landlord is like any other business, the more experienced you are, the cheaper it becomes as you master the craft. I’ve noticed that over the years my expenses have drastically reduced purely through experience and gained knowledge

Examples of Cost Savings: For the first couple of years I was using a high-street agent to find tenants. I’d say, on average, the acquisition would cost £700. But then I discovered online lettings agents, and my cost tenant acquisition cost reduced to £50. Massive difference, right?

Direct vs Agent Services

I often used to acquire things like gas safety certificates and EPC’s from letting agents. That’s without a doubt one of the most expensive ways of acquiring those things, because agents put a mark-up on the price

Going direct to suppliers can save substantial amounts over time.

Insurance: Your Financial Safety Net

The Importance of Proper Coverage

The research also found a dramatic drop in uninsured landlords. In 2022, 20% of landlords lacked insurance, but in 2024, this has plummeted to just 3.8%. However, this still leaves over 100,000 landlords financially vulnerable to unforeseen damages

Types of Coverage to Consider

Essential Insurance:

Buildings insurance (often mandatory for mortgages)
Landlord building insurance. It’s essential to ensure that your building insurance for the let property is specifically for landlords
Liability insurance for tenant and visitor accidents

Additional Protection:

Contents insurance for furnished properties
Rent guarantee insurance for void periods
Legal expenses insurance for dispute resolution

Frequently Asked Questions

How much does it really cost to be a landlord per month?

The total monthly cost varies significantly but typically ranges from £200-£600+ per property, excluding mortgage payments. This includes insurance, management fees, maintenance reserves, and various compliance costs.

What’s the biggest unexpected cost for new landlords?

Property maintenance costs have soared by 26.24% since 2022, with damage repairs increasing by 121%. Major emergency repairs and extended void periods often catch new landlords off-guard.

Should I use a letting agent or self-manage?

Generally, you can expect to pay anywhere between 8 – 14% of the monthly rental income for full management. Self-management can save money but requires significant time investment and knowledge of legal requirements.

How much should I budget for void periods?

Void periods are unpredictable. Budget for at least 1-2 months of void per year, though some properties may have longer gaps. It’s essential to have a financial buffer to cover mortgage payments, council tax, and other ongoing expenses during these periods

Are landlord costs tax-deductible?

Many costs are deductible against rental income, including maintenance, insurance, management fees, and safety certificates. However, mortgage interest is no longer fully deductible but you can claim back up to 20% of the mortgage interest back in tax relief

What happens if I can’t afford emergency repairs?

This is why contingency funds are crucial. Without reserves, landlords may face legal issues for not maintaining habitability, potential tenant compensation claims, and deteriorating property conditions that reduce rental income.

Conclusion

Being a landlord can be profitable, but success depends on realistic cost planning and proper financial preparation. The financial burden on UK landlords is heavier than ever, but those who budget accurately and maintain proper reserves can still achieve good returns.

Remember:

For New Landlords:

Budget for 20-30% of rental income going to various costs
Maintain substantial contingency funds
Understand all legal requirements before starting
Consider professional management initially

For Experienced Landlords:

Regularly review and update cost budgets
Stay informed about changing regulations
Build relationships with reliable contractors
Consider insurance coverage carefully

For Everyone:

Track all expenses for tax purposes
Deal with maintenance issues promptly
Never underestimate the importance of good tenants
Treat landlording as a proper business

The key message is this: If we were to summarise our advice it would be to save money where you can, spend your money wisely and keep some cash aside for the unexpected

Whether you’re considering your first rental property or expanding an existing portfolio, understanding these costs will help you make informed decisions and build a sustainable rental business.

Always seek professional advice for your specific circumstances, especially regarding tax implications and legal requirements. This guide provides typical cost ranges, but every situation is unique.