The Running Costs Of Being A Landlord

If you’re an aspiring landlord – or perhaps, one of the many ‘accidental’ landlords that got thrown into the deep-end (head first) – I’d say it’s important critical to have a comprehensive understanding of the costs associated to being a landlord so you can prepare your finances appropriately.

The reality is, after crunching the numbers, being a landlord may not even seem feasible. Yup, that could be tragic, but it’s a better alternative than pursing a plan that simply doesn’t make sense.

Unfortunately, many strolled into landlord-hood without grasping the running costs of being a landlord, which largely includes a whole bunch of unforeseen costs, and it’s been a primary reason for many failures.

Don’t be that kind of landlord.

The costs of being a landlord

I’m going to make a shameless confession before I do or say anything else: before I became a landlord I had no idea what the associated costs were, although I had naively convinced myself otherwise. I thought I knew it all (or at least could hazard an accurate guess). In retrospect, after years of experience, it’s become apparent that I was blissfully ignorant. I may as well have entered the Dragon’s Den without a business plan. Embarrassing.

In my feeble little head, I had reduced the financial costs of being a landlord to a small handful of expenses, which was actually, primarily why the whole landlord deal looked so mouth-watering. Don’t get me wrong, the whole landlord deal is still a sweet deal, just not as sweet as I initially anticipated in terms of cashflow!

Now, if you’re reading this blog post it means you’re probably a lot more sensible than I am, because I’m assuming you’re actually researching the costs of being a landlord before biting the bullet. Wise decision.

I want to clarify, the information I divulge isn’t to scare you, it’s to prepare you, and essentially make you a better landlord. Hopefully you’ll be able to form a rough, yet practical idea of the costs of being a landlord, so you’re able to assess your decision with a little more clarity and precision.

While no one can predict the unpredictable (trust me, a lot of unpredictable shit happens in this business), we can forge a typical balance sheet for a landlord.

From my experience, the following are the bare bone expenses that landlords have to endure…

Mandatory Costs

The costs of being a Landlord
ExpenseDescriptionCost (approx)
EPC (Energy Performance Certificate) An EPC is a legal requirement. It’s an assessment of how energy efficient your property is.

Landlords must have a valid certificate before any viewings are taken. An EPC is valid for 10 years (you only need to pay for one every 10 years), but can be renewed if you make significant energy efficiency improvements to the property and want it reflected in the report.

£65 every 10 years Order Online
Electrical Safety Inspection/Report (England Only) Since July 2020, landlords in England have been legally obligated to get a Electrical Installation Condition Report (EICR) in order to ensure national standards for electrical safety are met. The report must be renewed at least every 5 years.£199 every 5 yearsOrder Online
Gas Safety Certificate A landlord gas safety check is also a legal requirement, and it MUST be done annually.

All gas appliances and fittings must be checked by a Gas Safe registered engineer. At the end of the check, assuming everything is safe and in working order, you will be given a certificate.

£45 per yearOrder Online
Income Tax Being a landlord is like ANY other profiteering business- tax has to be paid!

For most landlords, any profit you make will be part of their income tax e.g. If you’re a basic rate taxpayer, you’ll pay 20%, while higher rate taxpayers pay 40%.

Varies per caseMore Info
Smoke & Carbon Monoxide alarms All landlords in England are required to supply and install smoke and Carbon Monoxide alarms. Fortunately it’s a pretty sensible and inexpensive requirement, so all good. The average house will need 2 smoke alarms (one per floor) and 1 Carbon Monoxide alarm, which should cost about £30 for all 3.More Info

Circumstantial costs

The following costs may apply depending on your specific situation…

The costs of being a Landlord
ExpenseDescriptionCost (approx)
Letting Agent Management Fees One of the most undesirable costs for landlords is agent managing fees, and that’s why so many landlords are now self-managing. As an example, a property that achieves £750 per month will cost approximately £1830 per year in management fees!

8 – 14% of rental incomeMore Info
Landlord License Some landlords will require a landlord’s license. Will you need one? Well, that depends on the location of your property. Some boroughs require landlords to have a licence, some don’t. The best way to find out is by contacting your local council.£500 every 5 yearsMore Info
Mortgage interest The cost of a mortgage applies to most landlords, particularly new ones. I can’t imagine there are too many landlords that won’t require a mortgage to get their foot onto the BTL ladder. Of course, the interest paid on the loan is an expense and should be taken into consideration.

It’s difficult to provide an accurate cost that will apply to everyone, as every circumstance is unique. So this is something you’ll have to work out. Something worth noting is that interest on BTL mortgages are generally higher than regular residential mortgages, so don’t base costs on residential mortgage rates. Look at the rates available for products today and base your costs on that.

Varies per caseFree BTL Mortgage Quotes
Landlord Insurance Ideally, this would be under the list of mandatory costs, but in reality, ‘Landlord building insurance’ isn’t a legal requirement for landlords. However, you’d be stupid not to have it. Also, most mortgage lenders won’t lend without adequate insurance in place.

There are various insurance types available, and many bolt on extras, which can come in handy (e.g. legal coverage, which covers costs for eviction). But at the very least, building insurance should be acquired.

Refer to the Insurance Guide for a rundown of the most common options available.

Varies by case. But I pay £150 per year for a 2 bedroom houseGet Free Quotes
Tenant Acquisition I can’t imagine there are many landlords out there that won’t have to endure the cost of acquiring a tenant, although it is still a “circumstantial cost”, because some landlords won’t (e.g. they’ll let to friends/family). The cost of tenant acquisition can vary depending on the method used e.g. online letting agent Vs High-street letting agent. Online Letting agent: £50
High-street agent: 8% of annual rental income
Online Agent Prices
Empty/Void periods This can be an expensive period, and it most commonly occurs during the transition between old tenants vacating and new tenants moving in. There’s almost always a void period, especially during a slow market, or/and repairs and decorating needs to be done before the new tenants move in.

This is when a contingency is useful, because you need to remember that your running costs will be going on, most notably mortgage payments, insurance and council tax.

Varies by case.
ICO Registration Under the Data Protection Act individuals and organisations that process personal information need to register with the Information Commissioner’s Office (ICO).

If you currently or retrospectively store, use or delete tenant personal information (e.g. name, email, telephone, address etc.) on any electrical device (i.e. computer, phone or tablet) – which is almost all landlords in the 20th century – then you should be registered with the ICO.

On a side note, from my experience 1) most landlords aren’t aware of this requirement so aren’t registered 2) many of those that are aware of the ICO don’t think it’s even necessary for landlords to register – there’s a bit of an ongoing debate among landlords on the issue.

One thing is for sure, I’ve yet to hear of a case where a landlord has been prosecuted for failing to register. But that’s not to say it’s NOT required.

Make of that what you will, I’m “just saying” :)

£40 per year.More Info

Here are a few other costs to consider…

Utility Bills
Generally, tenants are responsible for paying utility bills directly. However, some landlords do offer “bills included” as part of the deal. If that’s the case, this should be added onto the expenses, and also reflected on the rent cost.

(although, I personally think it’s a terrible idea for landlords to bake in the utility expenses with the rent, adds too many potential complications).

Maintenance & Repairs
Most of the points I cover can be inserted into the category of “maintenance and repairs”, but for the purpose of being as transparent as possible, I will discuss certain areas in more detail below.

There’s literally no way of avoiding this aspect of being a landlord, and there’s mostly no way of predicting how much you’ll spend on maintenance. I frequently have boilers, fridges, cookers and the plumbing die on me. However, there have always been years’ when I’ve gotten away without spending a penny on maintenance, while other years the costs have climbed into the thousands (it’s scary). In that respect, it’s pretty much like any other property that’s being lived in.

I’ve also had mother nature have her wicked way with me by blowing over garden fences. Not to mention, tenants that cause so much damage that the tenancy deposit doesn’t even begin to cover the cost of repair. How can you prevent or predict all of that? Impossible. That’s why it’s imperative to have a contingency pot of money to help cover these unexpected occurrences.

However, what I will say is that you can limit the costs. Extended warranties, insurance policies and landlord emergency repair services are available. For example, British Gas offer a landlord cover service, where they charge £15 per month to cover plumbing and electrical faults.

While it is impossible to predict exact costs, it’s very possible to get a better idea of how much you’ll spend on average on repairs and maintenance after a few years.

Size of property
Larger the property, the more it costs to run. That’s the general idea anyways. Reason being is that, simply, there’s usually more to break and maintain. But also, larger properties are usually rented to families, meaning there are more people living in the property, and in particular children. That all equates to higher probability of breakage and wear.

Age of property
Generally speaking, older houses are more expensive to maintain because they often have old-fashioned features which aren’t as cheap to repair and main as the newer stuff, they also tend to have older boilers, heating systems, and electrics, which can be expensive to keep alive.

Every few years and/or after going through a few tenants, you’ll probably have to freshen up the property. It’s part of the landlord cycle.

Personally, I’ve found that the carpets take the most beating, as do the condition of the walls, consequently I find myself repainting and laying down new carpets every 3 or so years per property.

Legal costs
The true underbelly of landlord life.

Assuming you’re a good landlord, and you stick to your legal obligations, the only legal costs you’re likely to encounter at some stage to the cost to remove and/or prosecute rogue tenants. This is unfortunately more common than most new landlords are aware of.

The costs of dealing with a rogue tenant can be soul-destroying, and not just the legal costs, but also the associated costs of losing out on unpaid rent, which is usually the case.

Furnished / Unfurnished
While furnished properties do demand higher rent and larger deposits, they do tend to cost more to maintain, for obvious reasons. Often, the extra earned in rent doesn’t cover all the “fair wear” expenses, so be aware of that.

I cover the pros and cons of furnishing a BTL in this blog.

Are you a pet-friendly landlord? Many aren’t, but some are. Tenants with pets notoriously find a hard time finding properties to rent, particularly dog owners. However, landlords can (and do) take advantage by demanding more rent from pet-owners. But it’s important to bare in mind, pets cause damage and may have an impact on the overall cost for maintenance and redecorating.

I wasn’t sure whether to include in the list. I know some people get touchy about the issue (mostly smokers). However, I do believe it’s something worthy of noting, and from experience, I know it’s a real issue.

Similarly to pets, tenant smokers can be destructive, particularly if they’re compelled to smoke indoors (good tenants will only smoke outside, fact!). Smoke can cause damage, and consequently reflect on the overall cost for redecorating at the end of the tenancy.

Leasehold properties
Most UK flats/apartments are leasehold properties – particularly in the South of England – and they’re a popular choice among many new landlords, largely due to the lower asking prices compared to freehold properties. But purely fixating on the lower ‘cost of entry’ is often a fatal mistake, because leaseholds generally come with added complications and ‘running costs’, which can make the proposition… not so profitable in the long-run. Most leaseholds add restrictions, which in many cases include regular ‘service charges’ and ‘ground rent’, both of which can quickly spiral out of control.

I’ve already written a blog post on whether I think leasehold properties are good for BTL. But in short, be wary of the fact that leasehold properties do come with extra running costs. So if you plan on buying leasehold, be sure to read the lease carefully and fully understand the costs. All the costs.

The round up

Relatively speaking, there is a lot to shell out for, and potentially much more than a lot depending on individual circumstances. It may even seem like blow-your-brains-out expensive (especially with inevitable and unpredictable maintenance issues), and I wouldn’t entirely blame you for feeling compelled to completely abandon ship and throw your money into penny shares instead.

Being a landlord definitely isn’t as easy as many believe, and that’s primarily because, as said, it’s a business based around people, and people are idiots… they’re often filthy, disruptive and generally irresponsible. I’ve had tenants break everything from bathtubs (literally) to my soul (by falling into arrears).

But don’t be discouraged, there is profit to be made (obviously), which can be summoned by purchasing the right property for the right price, and stuffing it with the right tenants. Sounds easy, right? it’s not. Fortunately, I’ve written an in-depth guide for new landlords that cover the essentials. Enjoy it (but only after you’ve finished with me here).

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. Essentially, I’m not as stupid as I once was.

One particularly significant example of enlightenment, was when I switched from high-street agents to online agents. It’s the best thing I ever did.

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. I paid that excruciating amount for a couple of years. But then I discovered online lettings agents, and my cost tenant acquisition cost reduced to £50. Massive difference, right?

“I was blind, now I see.”

Another example of how experienced reduced my costs is when I realised letting agents are generally the middle-man for most services. For example, 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 on the products and then hire third party suppliers. In reality, I could have just gone direct to the suppliers and saved myself a buttload, which is exactly what I do these days.
If I sat here counting how much my inexperience cost me, I’d be a blubbering, incoherent mess. I’d rather just chalk my losses up as lessons well learned, and opportunities to help others.

Lastly, I was just to clarify, a lot of the spiralling costs will be depending on YOU, the landlord, not just tenants. For example, if you use cheap materials and fittings that aren’t fit for purpose or durable, you’re likely to spend a lot more than necessary on repairs. But that’s a lesson new landlords usually learn through experience, because it’s hard to sway new landlords away from spending as little as possible when they’re starting out. However, for more information, you maybe interested in the how to renovate and decorate your buy-to-let property article.

I often become teary-eyed when I think of the money I wasted – not just with online letting agents – but in general. But that’s something wisdom and experience can help iron out. In the mean time, I hope my little nuggets of advice will prove for a good starting point in what you should expect.

Have a contingency

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, usually in the form of expensive debt, or even worse, negligence of their duties (e.g. ignoring tenants maintenance issues).

The “grab and run” approach can be extremely appealing, and you wouldn’t be the first to fall victim to its appeal. We’ve all done it. As in, when we see money in our account, we just grab and run. But that could lead to expensive mistake.

If you’re able to make profit every month after paying all your expenses (e.g. insurance, mortgage), 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, which will allow for a nice contingency, to cover (or at least help contribute) any of those unforeseen mishaps. ALWAYS have a contingency in place.

If anyone can think of any other costs, please let me know. I’m pretty sure I covered all of them though, or at least for the mandatory part anyways.

25 Join the Conversation...

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Sid 12th January, 2010 @ 13:05

Good information mate..

Im considering buying a property to rent out.

Now, if the mortgage is on capital repayments and the monthly rental income is greater, what sort of tax is paid?

I also have a day job, im on about £26k a year?

Myself and 3 other freinds may do this together, how would the tax issue work there.

How would you go about setting everything up. Do you have any links/guides for new landlords?

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Pamela 27th April, 2014 @ 16:44

Simon. You are right in one sense to maximise your allowable expenses on interest only,I've done that too. I think you might not be aware though that your capital gain is based on the selling price minus the purchase price with associated cost of buying.
If you borrow over and above the original purchase price 2 things will affect this strategy;
1. Interest cost on borrowing will not be allowable over the pp unless you demonstrate the released funds were applied to your property rental business.
2. Capital gains will be payable regardless of borrowing levels, when the sale is for an amount higher than the pp

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Daf 1st August, 2014 @ 11:22

Similar to Sid's comment above, I am new to the idea of renting but I am looking for some advice from those 'in the know'.

From my research into the rental market, student housing seems to be the area of the highest yield and quickest rate of returns. To me, the figures seem almost too good to be true (whilst in uni I stayed in a 10 bed house where rent was £70 per person per week - £700 a week total). Now with a standard mortgage of say 400-600 a month, the profit margin seems to good to be true.

Essentially my question would be what are the hidden costs to student landlords in particular? I understand the tighter control on fire procedures, gas and the issue of finding new tenants every year, but this alone surely barely touches the overall profit received?

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Dawn 23rd September, 2014 @ 20:29

Hiya i have a property and want togo alone (have no leting agent ) what do you need to be a landlord any advice would be great thank you

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Andy 8th December, 2014 @ 15:53

Simon, you mention paying down the mortgage on the rental, but it's more tax efficient if you use the profits to pay down the mortgage on your own home.


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Amie 5th April, 2015 @ 18:46

Firstly, thank you for this site. I have just discovered it and it's a gem!

We currently own our flat but are looking to move and convert it to a buy-to-let mortgage. The plan is a repayment product and to reduce the term of the mortgage so that interest payments are high enough to ensure no taxable profits (then once it has been paid off, remortgage it and use the funds on our own home).

Our buildings insurance is covered by the service charges. Would you recommend other landlord insurance on top of this?

Thanks again,

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Noel 4th February, 2016 @ 14:53

Thanks, I was looking for this.

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Zoe 10th April, 2016 @ 06:10

I think it's worth noting that you cannot let a property out on a standard mortgage. Maybe stating the obvious here but new landlords trying to work out their profit need to consider the extra costs associated with a buy to let mortgage (higher interest rates and sometimes higher set up fees).

Additionally at the moment banks are demanding minimum of 25% deposit to apply for a buy to let mortgage so needing that capital up front is important.

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Sunsure UK 15th February, 2018 @ 06:42

If you are a landlord then this blog is of great help for you, As they have nicely explained here why it is important to buy landlord insurance and how this can help you
Thank you was great experience reading it.

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Nicole kirk 6th April, 2018 @ 17:57

I own 3 houses and want to start renting them but don’t know where to start. I don’t have mortgages I own them outright but I am at a loss on how and where to start as I am only 22 yrs of age .

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Amy 6th April, 2018 @ 21:45

Nicole, Before you assume you want to let the properties, seek good tax advice from a qualified accountant. A lot has changed in the last few years so it's not the 'no-brainer' it used to be. If you're set on it, read all you can on this website and sign-up to the UPAD webinars. You'll need to invest a lot of time gemming-up but it'll save you of expense rather than using an agent.

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Daniel 10th October, 2018 @ 23:19

This is a very well explained piece. I am looking to rent out my flat as a long term investment and don’t intend on starting a portfolio. Am I right in thinking that with just one property (estimate to make approx 950pcm) I will fall within tax gain allowance and this will be one less expense?

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Pete 14th January, 2019 @ 18:07

What about council tax if you have no tenants. I don't see it included in this list.

The Landlord Avatar
The Landlord 14th January, 2019 @ 18:09

@Pete It's mentioned in the "Empty/Void periods" section.

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KJin 30th August, 2019 @ 15:06

You mention 'Have a contingency' above.
Can this be taken as a rolling pot before Tax that is not declared as profit, so will cover dead periods as well as unforeseen expense?
I previously read this can be up to 2% of the property value rolled year on year.

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LEP 27th December, 2019 @ 19:46

I know this may sound callous but my sister and I are Joint Tenants (25:25) with our stepmothers home (50) and for financial purposes we need to start charging our stepmother rent. As jointly we own 50% does this mean we can charge 50% of the rentable value to our stepmother? As a pensioner can she claim her 50 % payment from benefits? Taking into consideration our landlord responsibilities, again, are these only 50% of the total? Thus are we only 50% landlords? Any advice much appreciated.

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Yvie 18th July, 2020 @ 12:20

Looking at the cost of renting there seems little profit in it.

The Landlord Avatar
The Landlord 18th July, 2020 @ 12:28

Hi @Yvie,

Not sure how you came to that conclusion. Did you take into consideration the property price (i.e. you might find a bargain property or a property with particularly high yield) and/or benefit from rising house prices? Being a landlord is a long-term investment, which is largely based on increasing house prices. If you're basing your thoughts on a short-term investment/return, then being a landlord is unlikely to be for you.

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Yvie 19th July, 2020 @ 13:20

Hello Landlord - my son became a landlord by default. He moved with his job and had to rent his house out. He has found that there is a long list of outgoings to be paid for. The last four months have been very difficult, the tenant could not pay any rent and eventually admitted he would rather move out and live with his girlfriend even though there was eight months left on the agreement. My son did get the tenant's deposit in lieu of nonpayment of rent, but it was practically wiped out by agents fees. Hopefully things will get better.

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Lala 3rd November, 2020 @ 06:22

Hi Landlord

Myself & my husband are considering putting our savings into buying a house to let in the area we live. We’re both in the 20% tax bracket and houses in our area typically rent for £750-850pcm. Firstly what tax would we pay and secondly how do we find the cheapest insurance, buy to let mortgage and agent costs? Do we need a buy to let mortgage in principle before making an offer?

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Susie 15th May, 2021 @ 23:39

My ex is technically my landlord, and he is threatening to throw me out. I am willing to pay his landlord costs if not too much. Advice please

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Alistair Bkack 29th August, 2021 @ 08:08

Hi Landlord.

Firstly, thanks for your blog, there's cleary a lot of work gone into putting it together and it gave me some great insights that I hadn't considered.

I'm looking to become a landlord in Scotland, do you know what the deal is with council tax payments, ie. whether it's the landlord or the tenant that pays it? Should it be included in the rent, or is it an additional expense for the tenant like utilities are?

My main aim isn't to make profit from rent (although it would be a nice bonus!) My plan is to eventually buy around 10 properties, have the rent cover the costs and, once the mortgages are paid off, use them as a retirement investment.

If you have any other wisdom to share it would be greatly appreciated!

Thanks again,

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Clairebear 10th March, 2022 @ 22:43

Do you think it’s worth paying the agent’s monthly management fee? Other than experience I’m not sure what they bring to the table 🤔. As you have pointed out, they add their own fee to any services/repairs they may arrange.

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Annette 21st February, 2023 @ 20:26

Hi Landlord,
just wondering how up to date you think this article is at the moment? I am thinking about buying to let, but would need to look at a different city if I want to find a 2 or 3 bed house within my budget.

The Landlord Avatar
The Landlord 21st February, 2023 @ 21:39

Hi Annette,

I personally think it's relevant today as the day it was written. Obviously I can't account for every edge case, but it does cover most expenses landlords should generally expect, in my opinion.

Nothing wrong with investing a little further a field to meet the requirements of your budget. In fact, I think it's a great idea :)

Exciting times, so best of luck!

















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