Landlords boost profits despite rising start-up and running costs

Landlords are enjoying higher profits despite facing steeper start-up and running expenses, research reveals.

According to lettings and acquisition specialist, Dwelly, becoming a landlord now demands a heftier upfront investment, with average start-up costs climbing to £16,824 in 2025, a 63.3% jump from £10,302 in 2024.

The rise is mostly due to a 76.9% increase in Stamp Duty Land Tax, which now averages £14,926, reflecting higher levies on additional properties.

Other initial costs, such as fees for finding tenants and complying with digital tax requirements, have stayed relatively steady.

PRS is more complex

The firm’s Sam Humphreys said: “Today’s rental landscape is more complex, with higher upfront costs and slower capital growth.

“But our research shows landlords are adapting well, supported by falling mortgage costs and a strong underlying rental market.”

He added: “What matters most is the return, and it’s going up.

“That’s a strong sign that, even in a tougher market, well managed properties can still outperform.”

Landlord profitability shifts

The firm examined the costs and earnings tied to owning rental properties, including their purchasing expenses, operational outlays and income from rent and property value growth.

By comparing 2025 data with the previous year, Dwelly uncovered major shifts in the profitability of buy to let investments.

On the operational side, annual expenses for maintaining a rental property have dropped by 24.6% from £15,694 to £11,829.

The biggest saving stems from a 39.6% reduction in mortgage interest payments, which fell from £10,210 to £6,162, thanks to lower variable rates.

Maintenance and repair costs also dipped slightly by 5.1%, although losses from unoccupied properties and insurance premiums have risen.

Rent income rises

Rental income has seen a modest uptick of 3.6%, reaching £15,684 per year.

However, total earnings from BTL properties, combining rent and property value increases, have fallen by 6.6%, from £29,901 to £27,923.

This decline is largely due to slower property price growth, with annual capital gains dropping from £14,757 to £12,239.

However, after subtracting ongoing expenses from total income, the average landlord now pockets £16,093 annually, a 13.3% improvement over last year’s £14,206.