The cost of running a rented home has risen far faster than the rent it produces, according to an analysis of HMRC data.  

The analysis has been conducted by the lettings platform Hello Neighbour.

Figures show 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 were £22.33 billion and £46.69 billion. 

Expenses have therefore risen 56% while income has risen 26%, and the share of rental income consumed by costs has climbed from 47.8% to 58.9%.

On a per-landlord basis, average rental income reached £20,500 in 2024-25, the highest in the five-year series.

Meanwhile average declared expenses reached £13,700.

In the most recent year alone, total expenses rose 11% while total property income was, in HMRC’s own description, “fairly consistent”.

Repairs and maintenance were claimed by 1.92 million landlords, 66%of the landlord population and the most commonly declared expense of any category. 

Between them they claimed £6.41 billion, an average of £3,339 per landlord in a single year. 

HMRC does not publish that average; it is calculated by Hello Neighbour from the published totals.

HMRC excludes capital improvements from the category by definition, so kitchens, extensions and most energy efficiency work, for example, are not in the total. 

And it counts only what was claimed, so any work done that is not on a return is absent.

The spending comes ahead of a schedule of statutory obligations falling on landlords that owner occupiers do not face. 

Every privately rented home in England must reach EPC C or register an

exemption by 1 October 2030, and the future Decent Homes Standard applies to the sector from 2035. 

Government grant support currently funds one property per landlord in full,

with a 50% contribution required for any properties after that.

The largest single category of landlord expense is no longer anything to do with the building – it’s finance.

Residential finance costs reached £12.82 billion in 2024-25, 37% of all expenses

declared and almost exactly double the repairs bill. 

They were claimed by 1.15m landlords, an average of £11,148 each.

Since April 2020, under the Section 24 restriction, those costs have not been deductible in computing rental profit. 

Landlords instead receive a tax reducer worth 20% of the finance cost. 

For a basic rate taxpayer the outcome is broadly unchanged. 

For a higher rate taxpayer it is not: on average finance costs of £11,148 they receive £2,230 of relief where full deductibility would have given £4,459, leaving them roughly £2,230 a year worse off on an identical property.

Companies are exempt from the restriction and continue to deduct finance costs in full. 

The penalty therefore attaches to the legal form in which a landlord holds a property rather than to anything about the property or the household living in it.

Phil Shelley, chair of Hello Neighbour, comments: “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.”