Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.

Landlord Property Costs Now Rising Faster Than Rental Income

New research indicates that the cost of running a rental property in the UK has increased significantly faster than rental income over the past five years. Analysis by lettings platform Hello Neighbour, using HMRC property rental income statistics, highlights a growing gap between landlord expenses and rental growth.

According to the research, unincorporated landlords declared £34.75 billion in allowable expenses for 2024/25, compared to £58.99 billion in rental income. Five years earlier, these figures stood at £22.33 billion and £46.69 billion respectively. This means expenses have risen by 56%, while rental income has increased by only 26% over the same period.

The share of rental income consumed by costs has also grown, moving from 47.8% five years ago to 58.9% in 2024/25. On average, Hello Neighbour reports that landlords received £20,500 in rental income and declared £13,700 in expenses for the 2024-2025 period, both the highest figures in the five-year series.

In the most recent year, total landlord expenses rose by 11%, while HMRC described total property income as “fairly consistent.” Repairs and maintenance were the most commonly declared expense, claimed by 1.92 million landlords and totalling £6.41 billion—an average of £3,339 per landlord. However, residential finance costs were the largest single expense, reaching £12.82 billion in 2024/25, which is 37% of all declared expenses and nearly double the repairs bill. These finance costs were claimed by 1.15 million landlords, averaging £11,148 each.

The research also notes a difference in tax treatment between company landlords and unincorporated landlords. While company landlords can claim full mortgage interest as an expense, unincorporated landlords can only claim at their marginal rate. Hello Neighbour highlights that a higher rate taxpayer receives £2,230 of mortgage interest relief, compared to £4,459 if full deductibility were allowed, leaving them around £2,230 a year worse off than if the property were owned by a company.

These findings are relevant for letting agents and inventory clerks monitoring landlord profitability and the impact of rising costs on the private rented sector.