Landlord expenses have risen significantly faster than rental income over the past five years, according to the latest HMRC property rental income figures.

Unincorporated landlords declared £34.7 billion of allowable expenses in 2024-25 against £58.9 billion of rental income. Five years earlier, expenses stood at around £22.3 billion against rental income of £46.6 billion.

This represents a 56% increase in expenses compared with a 26% rise in rental income. As a result, the proportion of rental income consumed by costs has increased from around 48% to 59%.

The figures cover 2.88 million unincorporated landlords filing self-assessment, including individuals and partnerships. Average rental income per landlord reached £20,500 in 2024-25, the highest level recorded during the five-year period, while average declared expenses reached £13,700.

The pressure on costs also continued during the most recent year, with total landlord expenses increasing by 11%, while HMRC described property income as “fairly consistent”.

Finance and maintenance remain major costs

Residential finance costs were the largest individual expense, reaching approximately £12.8 billion and accounting for 37% of all expenses claimed against UK property income. Around 1.15 million landlords claimed finance costs, equivalent to an average of £11,148 each.

Repairs and maintenance were another major expense. Around 1.92 million landlords, representing 66% of the landlord population, declared a combined £6.41 billion, equivalent to an average of £3,339 per landlord.

These figures exclude capital improvements such as new kitchens, extensions and most energy-efficiency work.

The analysis also highlights the effect of Section 24 on mortgaged landlords. Since April 2020, individual landlords have been unable to deduct residential finance costs when calculating taxable rental profits and instead receive a basic-rate tax reduction worth 20% of those costs. Companies remain outside the restriction and can continue to deduct finance costs in full.

Further property-related expenditure is also expected in the coming years. Privately rented homes in England will need to achieve EPC C or secure an exemption by October 2030, while the reformed Decent Homes Standard is due to apply to the sector from 2035.

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. Policy needs a second setting that helps compliant landlords meet the standards rather than only penalising the minority who do not.”

Landlord numbers show a mixed picture

HMRC figures show that the number of individual landlords fell by 20,000 in the latest year, from 2.87 million to 2.85 million. However, the overall number of unincorporated landlords increased slightly from 2.87 million to 2.88 million due to partnerships.

Chris Norris, chief policy officer at the NRLA, said the figures were consistent with some landlords leaving the market while others expand their portfolios.

“Anecdotally, this reflects what we are seeing at the NRLA, with some landlords leaving the market while others who remain are expanding their portfolios,” he said. “This could help explain why rental income has remained relatively resilient despite the overall number of landlords falling.

“That this has happened in the period running up to the implementation of the Renters’ Rights Act is telling. Landlords are facing a more complex and costly legislative environment, with lower profits and higher taxes making many reconsider their place in the market. To prevent more landlords from exiting the private rental market, ministers should scrap the stamp duty surcharge on new rental homes, reconsider the planned income tax rise on rental income, and deliver the court reform landlords were promised.”