For many UK landlords, rental income is only one side of the equation.

Mortgage costs, repairs, insurance, management fees, professional services and other property expenses can all affect the amount ultimately retained from a rental property.

The latest HM Revenue & Customs (HMRC) Property Rental Income Statistics, published in August 2026, provide an interesting insight into how this balance has changed.

The figures show that property expenses declared by unincorporated landlords increased by 56% between 2020/21 and 2024/25, while total property income increased by 26% over the same period.

That does not mean every landlord has experienced a 30-percentage-point squeeze in profitability. However, it does highlight how important cost management has become within the UK rental sector.

HMRC's latest figures at a glance

In the 2024/25 tax year:

• 2.88 million unincorporated landlords declared UK property income.

• They declared almost £59 billion in total property income.

• 87.7% declared at least one type of allowable property expense.

• Total declared allowable expenses reached £34.75 billion.

• Average declared property income was approximately £20,500 per landlord.

• Average declared property expenses reached approximately £13,700 per landlord.

The five-year trend is particularly notable.

Between 2020/21 and 2024/25, total property income increased by approximately £12.3 billion, or 26%.

Over the same period, declared property expenses increased by £12.42 billion, or 56%. Average expenses per landlord increased by 54%.

The comparison

This is arguably the most important takeaway from the latest HMRC release: landlords are seeing substantially higher declared costs alongside higher rental income.

Where are landlords spending the most?

HMRC's data breaks expenses into several categories.

The largest category in 2024/25 was residential finance costs, at £12.82 billion.

That represented approximately 37% of all declared property expenses among unincorporated landlords.

Other major categories included:

• Repairs and maintenance: £6.41 billion

• Other allowable expenses: £4.58 billion

• Legal, management and professional fees: £4.16 billion

• Rent, rates and insurance: £3.81 billion

• Services, including wages: £1.64 billion

• Non-residential finance costs: £1.33 billion

This shows that the cost of operating a rental property goes well beyond the mortgage payment.

For landlords managing older properties, for example, maintenance and repair expenditure can become an increasingly important part of the annual budget.

For landlords using letting agents or professional property managers, management and professional fees also form a significant expense category.

Mortgage costs remain a major consideration

The scale of residential finance costs is particularly significant.

HMRC recorded £12.82 billion of residential finance costs declared in 2024/25.

However, landlords should be careful when interpreting this figure because finance costs for individual landlords of residential property are subject to specific tax rules.

Since April 2020, residential finance costs for individual landlords have generally not been deducted directly from rental income when calculating taxable property profits. Instead, qualifying finance costs are generally relieved through a basic-rate tax reduction mechanism, subject to the applicable rules.

This means that a landlord's accounting cash flow and taxable property profit are not necessarily the same thing.

For investors assessing a property, therefore, looking only at gross rent can give an incomplete picture.

Rental income is still increasing — but more slowly

The HMRC data does not suggest that rental income is falling across the board.

In fact, total property income declared by unincorporated landlords reached £58.99 billion in 2024/25, compared with £59 billion in 2023/24 — effectively flat year on year after several years of growth.

The wider rental market provides some context.

The Office for National Statistics reported that average UK private rent increased by 3.7% in the 12 months to July 2026, reaching £1,393 per month. England's average rent reached £1,451, while Wales reached £843 and Scotland £1,016.

So rents are continuing to rise, but that does not automatically mean landlord profitability is increasing at the same rate.

The key question for an individual property is:

How much of the rental income remains after the property's full operating costs are taken into account?

Why gross rental yield isn't the whole story

Gross rental yield remains a useful starting point when comparing properties, but it does not capture the complete financial picture.

Consider a simplified example:

A property produces £12,000 a year in rent.

If annual operating costs, maintenance, insurance, management and other expenses total £3,500, the amount available before financing and tax is materially lower than the headline £12,000 rental income.

If the property also has borrowing costs, the remaining cash flow can reduce further.

This is why investors should consider:

Gross rent → operating expenses → finance costs → tax → net cash flow

rather than simply:

Gross rent → return

The actual figures will vary substantially depending on the property, financing structure, tax position and ownership arrangement.

The cost problem may be particularly important for older properties

A landlord with a recently refurbished property may have a different cost profile from an investor managing an older property that requires frequent maintenance.

Repairs and maintenance represented £6.41 billion of declared expenses in 2024/25, with 66.2% of unincorporated landlords reporting expenses in this category.

This highlights an important consideration when purchasing property:

The cheapest property to buy is not necessarily the cheapest property to operate.

A lower purchase price may be attractive, but investors should also assess:

• Age and condition of the property

• Likely maintenance requirements

• Heating and energy efficiency

• Insurance costs

• Management requirements

• Local rental demand

• Potential void periods

• Financing costs

• Licensing or compliance requirements

• Planned capital expenditure

A thorough assessment before purchase can help investors understand the likely cost structure rather than relying solely on the asking price or headline rental yield.

Are landlords necessarily becoming less profitable?

Not necessarily.

This distinction is important.

HMRC's statistics show that declared expenses have grown faster than declared property income, but they do not provide a simple measure of profitability for every landlord.

The statistics cover unincorporated landlords who file Income Tax Self Assessment returns. Incorporated businesses with property income are not included, and the data does not capture landlords whose property income falls below the threshold for inclusion in Self Assessment.

There is also an important statistical consideration: HMRC notes that the 2026 figures include a correction to the services expense estimates because figures previously reported on the SA105 return had been omitted from that category. This affects comparisons with earlier editions.

Therefore, the 56% increase should be understood as a trend in declared expenses, rather than evidence that every landlord's personal costs have risen by exactly 56%.

What does this mean for property investors?

The latest HMRC figures reinforce a broader shift in the way property investment needs to be assessed.

Investors cannot simply ask:

"How much rent will this property generate?"

They increasingly need to ask:

"What will it cost to own, finance, maintain and manage this property — and what remains afterwards?"

This makes detailed due diligence increasingly important.

1. Assess the full cost structure

Before purchasing, investors should model anticipated expenses rather than focusing exclusively on rental income.

2. Stress-test mortgage costs

Borrowing costs can have a substantial effect on cash flow, particularly for highly leveraged properties.

3. Allow for maintenance

A property that looks attractive on paper may require significant expenditure over its ownership period.

4. Consider management costs

Professional management can provide convenience and expertise, but it needs to be included within the financial model.

5. Look beyond headline yield

Two properties with similar gross yields can produce very different outcomes once operating costs and financing are considered.

6. Review the property strategy regularly

Changes in financing, regulation, tenant demand, maintenance requirements and local market conditions can all affect the economics of a rental property.

A changing environment for landlords

The HMRC figures arrive at a time when landlords are also navigating significant changes across the rental sector.

The Renters' Rights Act changes that came into force in England on 1 May 2026, including the move to assured periodic tenancies and abolition of Section 21, have added further importance to understanding compliance and property management requirements.

At the same time, rental growth is continuing, but at a more moderate pace than some of the stronger increases seen in previous years.

For landlords, the combination means that financial planning and operational management are becoming increasingly important parts of successful property ownership.

The bigger picture

The latest HMRC data does not mean that buy-to-let has become unviable.

Instead, it provides a useful reminder that rental income and investment returns are not the same thing.

Between 2020/21 and 2024/25, unincorporated landlords saw declared property income increase by 26%, while declared property expenses increased by 56%.

That gap makes it increasingly important for investors to understand the numbers behind a property before committing capital.

A property can have strong rental demand and still produce disappointing cash flow if its financing, maintenance and operating costs are too high.

For today's landlord, the focus is therefore shifting from simply finding rental income to understanding sustainable net returns and long-term property performance.

Key Takeaways

HMRC's latest data highlights five important points:

1. Property income increased 26% between 2020/21 and 2024/25.

2. Declared property expenses increased 56% over the same period.

3. Residential finance costs were the largest expense category, at £12.82 billion in 2024/25.

4. Repairs and maintenance accounted for £6.41 billion, showing the importance of ongoing property costs.

5. Gross rental income alone does not determine investment performance.

For landlords and investors, the lesson is straightforward: understand the complete financial picture before making a property decision.

References

HM Revenue & Customs — Property Rental Income Statistics 2026
HMRC: Property Rental Income Statistics 2026

HMRC — Property Rental Income Statistics collection
HMRC: Statistics for Property Rental Income

HMRC — Property Income Manual: Residential Finance Cost Restrictions
HMRC: Residential Property Finance Cost Restrictions

HMRC — Finance Cost Restriction Rules
HMRC: Finance Cost Restriction

Office for National Statistics — Private Rent and House Prices, UK: August 2026
ONS: Private Rent and House Prices, UK — August 2026

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Disclaimer: This article is for general information only and does not constitute financial, investment, tax, legal, housing or regulated advice. Property investment involves risk and outcomes are not guaranteed. Supported and transitional housing can involve additional operational, regulatory and funding considerations. Appropriate independent professional advice and due diligence should be obtained before making investment decisions.