Research carried out by Pegasus Insight found that landlords now spend between 25% and 45% of their gross rental income on running costs.
This includes maintenance, servicing, insurance, utilities, professional fees and regulatory compliance.
Maintenance and repairs made up the biggest cost, accounting for between 31% and 39% of total spend, depending on the property type.
Average annual expenditure stood at £19,604 for landlords with non-house in multiple occupation (HMO) properties, with costs rising to £35,720 for those running HMO portfolios.
The average buy-to-let (BTL) portfolio generated gross income of £79,000 per year.
Utility bills made up 16% of spending for HMO landlords, compared to 4% for those with non-HMO properties.
Strong rental yields were reported, but costs for running portfolios increased as landlords worked to keep up with regulations and maintain standards.
Mark Long, founder and director of Pegasus Insight, said: “Maintenance and repairs have always been a core cost for landlords, but what we’re seeing now is a step-change in scale.
“Even with yields at multi-year highs, a growing share of rental income is being absorbed by day-to-day running costs and compliance demands.
“For many landlords, particularly those with older stock or more complex portfolios, the challenge is no longer generating income, it’s protecting margins in the face of rising costs.”
Long added: “Our wider research shows that landlords are investing more than ever to keep properties safe, compliant and habitable, yet maintenance remains a pressure point in the rental relationship.
“Rising labour costs, supply chain issues and higher tenant expectations all make delivering timely repairs more challenging.
“The risk is that sustained increases in upkeep costs ultimately feed through into higher rents, as landlords look for ways to fund the ongoing investment required to keep properties in good condition.”
