What are the Costs of Being a Landlord in London?

Renting out property can be an excellent way to supplement your income – or even give you a new career. Perhaps you’re considering investing in property in Hackney, East Ham or Plaistow, or letting out a place you already own in Woodford or Forest Gate. Whatever your plan for being a landlord, you won’t be alone as a new entrant, with the English Private Landlord Survey revealing that around 42% of landlords have been in the business for a decade or less.

However, it’s essential to do the maths and work out the costs of being a landlord. Recent changes to the private rented sector such as the introduction of the Renters’ Rights Act 2025 and Making Tax Digital have brought additional landlord responsibilities and potentially, further costs. To help you get started, we look at fourteen costs landlords need to consider when deciding if buy-to-let is right.

At a Glance – Landlord Estimated Costs Summary Table

Landlord cost	Typical monthly cost/provision	Typical annual cost/provision
BTL mortgage	£950 to £1,500	£11,400 to £18,000
SDLT	N/A – One-off purchase cost	Upfront cost of £30,000 (based on £400,000 property value)
Property purchase costs	N/A	One-off purchase cost
Income tax	£100 to £400	£1,200 to £4,800
Landlord insurance	£13–£50	£150–£600
Referencing & credit checks	Usually not monthly	£25–£60+ per applicant
Letting agent – full management	8–15% of rent	8–15% of annual rent
Repairs & maintenance	5–10% of rent	5–10% of annual rent
Void periods	5% of rent provision	5% of annual rent
Rent arrears	Variable	Variable
Compliance & certificates	£25–£55 provisionally	£320–£680
Membership fees	£10–£25+	£120–£300+
Landlord/property software	£0–£30+	£0–£360+
Selective licensing (single-let)	Usually annualised	£150–£240 annualised
HMO licensing (where applicable)	Usually annualised	£200–£1,100+ annualised

1. Buy-To-Let Mortgage Costs

If you rent out property with a mortgage, you will need a specific buy-to-let product rather than a residential loan. Sadly, buy-to-let mortgages come with higher interest rates than residential ones, so don’t base your decision on what you’re currently paying for your home.

Buy-to-let mortgages also tend to be interest only rather than repayment, meaning you won’t have paid off the original loan at the end of the term. You may need to pay an arrangement fee of around £1,000 too. Check comparison sites for the best deals, and consider using a specialist mortgage broker to help you.

2. Stamp Duty Land Tax (SDLT) Cost

If you’re buying the property, you must pay stamp duty land tax (SDLT) on the purchase. As of 31st October 2024, landlords pay the additional 5% second home surcharge if they own property already.

Additionally, the nil rate threshold band for stamp duty land tax reverted back to £125,000 from £250,000 from 1 April 2025 and threshold changes across the bands have resulted in higher stamp duty tax for landlords.

SDLT on £300,000 BTL Property

• Between 31 Oct 2024 and 1 April 2025 – £17,500
• Since 1 April 2025 – £20,000

3. Costs Of Buying The Property

Prepare for higher fees and larger deposits of at least 20% when you purchase a buy-to-let property, plus agents’ fees, solicitors’ fees and survey fees. Expect to pay a booking fee of £100-£300, valuation fee and arrangement fee, and average costs of £450 on a homebuyer survey, and £500-£1500 on conveyancing fees.

4. Landlord Income Tax & Making Tax Digital

property business at the basic or higher rate, calculated on your landlord profits and any other income. If you aren’t registered for self-assessment, you must do so by 5 October following the tax year you received rental income.

You will pay tax on the profit after allowable expenses have been deducted. Allowable expenses include building insurance, contents insurance, repairs and maintenance (not improvements) and utility bills. If you make a loss, you can usually carry this forward and offset it against the next tax year’s profits.

Landlords are no longer able to deduct mortgage interest from their tax calculations; a 20% tax credit applies instead. This means that higher rate taxpayers have increased tax costs.

Since April 2026, landlords with a gross rental income of over £50,000 are legally required to submit updates on a quarterly basis using approved Making Tax Digital (MTD) software rather than doing an annual return. Depending on which software you choose, you will need to factor MTD software into your costs.

It’s usually best to get advice about property taxes and self-assessment from an accountant with experience in property and tax. This could save you from making expensive mistakes but accountancy fees will add to your costs.

5. Landlord Insurance Fees

As with any property, you must take out building insurance, but you may benefit from other types of landlord insurance too. It is essential to look for a policy designed for landlords, and ensure that your insurer knows you are renting the place to tenants.

Landlords may consider other insurance, such as:

• rent guarantee insurance, in case your tenant fails to pay their rent.
• breakdown insurance for your heating system, plumbing and electrics.
• accidental damage cover in case the tenants cause damage beyond wear and tear.
• contents insurance to cover any items you have supplied in the property.
• landlord legal cover can insure you for legal costs including evictions.

6. Tenant referencing and credit checks

Tenant referencing and credit checks can lessen your chances of costly rent arrears or problem tenants. You’ll pay a fixed fee, and your letting agent can arrange these services to vet your new tenants.

7. Letting Agent Fees

Most landlords rely on a letting agent to find tenants, as only agents can add a listing to the main online property portals. Sites like Rightmove and Zoopla are potential tenants’ first port of call.

Tenant-find services cover promotion to help get potential tenants through the door, conducting viewings, the inventory and the tenancy agreement. Aside from convenience, their expertise can avert costly errors in the long run.

If you appoint your letting agent to cover property management, the cost typically ranges from 6-14% of your rental income, depending on the level of service you opt for. You can save money by going it alone, but using a property management company can save time and stress.

With a property management service, your letting agent will be your tenant’s point of contact for maintenance calls and queries throughout the tenancy. Your agent can also handle rent collection, and follow-up missed rent payments.

8. Repairs And Maintenance

Like any homeowner, you must factor in repair and maintenance costs. Maintaining the rental property can help prevent problems further down the line. You must also comply with the law when providing your tenants a decent and safe place to live.

Ensure your property is fit for human habitation and meets minimum energy efficiency standards and regulations around gas, electrical and fire safety (e.g. fitting a carbon monoxide alarm). Cutting corners in these areas could put you on the wrong side of the law.

Make sure you budget for regular refurbishment of the property – this will help you let the place quickly and save you money in the long run.

9. The Rising Cost of Energy Efficiency & EPC Standards

The current minimum EPC rating for private rented properties is E but this is set to be increased to a minimum rating of C in 2030. Landlords are required to have a valid EPC which usually lasts for 10 years, costing around £60 to £100.

If your rented property is currently below the C rating, there will be costs to make the necessary energy efficiency improvements to ensure that your property meets the minimum standards in future.

Your energy performance certificate will list recommendations for making upgrades, highlighting those that will have the biggest impact on improving the rating. These typically include:

• Loft-roof insulation
• Draught proofing
• Cavity wall insulation
• Smart thermostat
• Double glazing
• Boiler upgrades

Even if your most recent EPC meets the required standards, it is advisable to budget for regular energy upgrades to help manage future costs.

10. Void Periods

Void periods are times between tenancies when you don’t have a tenant paying rent on the property. They could happen because you can’t find a suitable tenant, or you can’t rent the place because you need to carry out repairs or refurbishment.

Many landlords factor in voids of four to eight weeks per year, and budget along the way to meet the mortgage payments if the property is vacant. Remember, you will need to pay council tax and bills for the property while it is empty.

11. Rent Arrears & Possession Costs

Tenants failing to pay monthly rent is a common hazard of renting out property, so budget just in case. You can also take out insurance to cover lost income, and help minimise the chance of this happening by carrying out thorough credit and referencing checks.

If you need to take your tenant to court to gain possession of the property, this will involve legal costs. Section 21 evictions were abolished on 1 May 2026, with the only eviction route now being through a Section 8 with specified grounds.

The threshold for rent arrears eviction grounds has been extended to 3 months (from 2) and a 4-week notice period is required. Resolving a case is likely to take longer, especially as the accelerated process under Section 21 is no longer an option. The lengthier timeline for evictions to be resolved will potentially increase costs for landlords.

Check the gov.uk website for the latest information on notice periods for an idea of how long this may take – as well as the costs relating to different parts of the process.

12. Landlord Responsibility Costs

As we’ve said, you are obliged by law to carry out specific duties, each of which comes with a cost. To meet landlord legal requirements, you need to arrange and pay a fee for:

• energy performance certificate (EPC) inspection and possibly improvements to make the property more energy-efficient
• gas safety checks by a gas-safe registered engineer for gas boilers and appliances each year, to obtain a gas safety certificate
• fitting smoke alarms on each storey and carbon monoxide alarms in rooms with a fuel burning appliance
• electrical safety inspection every five years (EICR)
• storing your tenant’s security deposit in a government-backed scheme
• if you are renting the property as a house in multiple occupation (HMO), a licence from the local council
• Information Commissioner’s Office (ICO) registration as landlords are information handlers (currently £40 for micro organisations)
• maintenance and repairs to keep the property up to a habitable standard

Under the Renters’ Rights Act, a new Private Rented Sector Database and Landlord Ombudsman is being set up and both will be mandatory, with registration costs expected. The fees have not been announced yet and will be shared closer to the implementation date, so these will bring additional costs.

13. Membership and Software Fees

Many landlords use property management apps or software like Landlord Studio or Landlord Vision for their portfolio, and join a professional association to boost their credibility or access training and resources. Exact costs vary, but National Residential Landlord Association (NRLA) membership fees are around £100 annually, while the London Landlord Accreditation Scheme (LLAS) 2-year or 5-year membership is free after completing a £100 or £200 training course.

The new requirement for using Making Tax Digital approved software for submitting accounts where annual profits are over £50,000 will also carry fees unless you choose a free option, but these typically have limited features. MTD software costs around £10 to £15 per month.

14. Landlord Licensing Costs

You may need a landlord licence, depending on the property size and your local council.

• Selective Licence – In certain areas, selective licensing schemes apply where there’s one household or two unrelated tenants in a standard residential rental. Costs vary, but the Newham Council selective licence costs £750, while Redbridge Council’s fee is £997.69.
• Mandatory HMO Licence – Large HMOS with 5 or more people sharing facilities will need a mandatory licence. Fees increase according to capacity and start at £977 in the London Borough of Tower Hamlets, and start from £1,500 in Barking and Dagenham.
• Additional HMO Licence – This covers smaller HMOs of 3-4 people from at least two households. Costs generally rise according to the number of rooms, starting at £1,323 in Tower Hamlets, £1,250 in Newham, and £1,865.34 in Redbridge.

East London Landlord Licensing Costs at a Glance

Area	Selective Licence	Mandatory HMO Licence	Additional HMO Licence
Newham	£750	From £1,400	£1,250
Redbridge	£997.69	From 2,185.95	From £1,865.34
Tower Hamlets	£897	From £977	From £1,323
Barking & Dagenham	£950	From £1,500	£1,400

How Landlords Can Reduce These Costs

While there are lots of costs involved in being a landlord, areas of East London such as Redbridge command good rental income. The average monthly rent in Redbridge over the 12 months up to June 2026 was £1,724 so despite the costs involved, landlords can still find profitable rental properties.

There are also ways that you can reduce costs to increase your rental profits, including:

• Joining a landlord association to get discounts on licensing fees.
• Bundling insurance instead of having separate policies.
• Arranging preventative maintenance to avoid larger repair bills.
• Taking out a guaranteed rent scheme to cover void and missed payment costs.

We hope this breakdown of costs has helped to give you a clearer picture of the realities of being a UK landlord. If you’re thinking of investing in property in Silvertown, Rainham, Collier Row or Newbury Park, talk to us. We’d be happy to share our years of experience working with landlords in east London and help you decide if it’s right for you.

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