Landlord operating costs have increased more than twice as fast as rental income over the past five years, according to analysis of official tax data.
Research by lettings platform Hello Neighbour, based on HMRC’s property rental income statistics, found that unincorporated landlords declared £34.75 billion of allowable expenses in 2024/25 against £58.99 billion of rental income. Five years earlier, the figures stood at £22.33 billion and £46.69 billion respectively.
This represents a 56% rise in expenses compared to a 26% increase in rental income. The proportion of rental income consumed by costs has climbed from 47.8% to 58.9% over the period.
Per-landlord breakdown
On a per-landlord basis, average rental income reached £20,500 in 2024-2025, whilst average declared expenses reached £13,700. In the most recent year alone, total expenses rose 11% whilst total property income remained, in HMRC’s description, “fairly consistent”.
Repairs and maintenance were claimed by 1.92 million landlords, totalling £6.41 billion or an average of £3,339 per landlord. This made it the most commonly declared expense category.
Residential finance costs represented the largest single expense, reaching £12.82 billion in 2024/25—37% of all expenses declared and almost exactly double the repairs bill. These were claimed by 1.15 million landlords, averaging £11,148 each.
Tax treatment disparity
The figures highlight the impact of mortgage interest relief restrictions for unincorporated landlords. Whilst company landlords can claim full mortgage interest as an expense, unincorporated landlords can only claim at their marginal rate.
According to Hello Neighbour’s calculations, a higher rate taxpayer receives £2,230 of mortgage interest relief where full deductibility would have provided £4,459, leaving them approximately £2,230 worse off annually compared with a property owned by a company structure.
The cost pressures on landlords come as the broader property finance market shows activity, with refinancing solutions and bridging finance options remaining available for property investors.
Phil Shelley, chair of Hello Neighbour, commented: “A sector housing a fifth of the country cannot absorb costs rising at twice the rate of income indefinitely. Landlords are being asked to fund upgrades the country wants through a tax system that treats them worse than a company holding the identical building.”
The data covers unincorporated landlords only and does not include properties held within corporate structures, which face different tax treatment and may show different cost-to-income ratios.
