First-Time Landlord Costs: What to Budget For
First-year landlord costs typically run £3,500–£6,500 on top of the purchase, including stamp duty surcharge, conveyancing, safety certificates, insurance, agent fees, accountancy, and a maintenance buffer. Annual running costs after year one are usually 25–35% of gross rent for personal landlords once compliance, voids and tax are factored in.
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# First-Time Landlord Costs: What to Budget For
New landlords almost always underbudget. The headline costs (stamp duty, deposit, agent fee) are easy to find online. The hidden costs — safety certificates, contingency, accountancy, the EPC upgrade — are where first-year cashflow tends to go pear-shaped. This guide lists every line item we see in real landlord budgets in 2026, with realistic figures for England.
One-off costs at purchase
These are the cash you need on top of your deposit before completion.
| Cost | Typical range | Notes |
|---|---|---|
| Stamp Duty Land Tax | Standard SDLT + 3% surcharge | +3% on full purchase price |
| Conveyancing solicitor | £1,200–£2,000 | Higher for leasehold or limited co |
| Survey (HomeBuyer Report) | £400–£800 | Building Survey £800–£1,500 |
| Lender arrangement fee | £500–£2,000 | Often 1–2% of loan amount |
| Mortgage broker fee | £0–£995 | Some are commission-only |
| Anti-money laundering checks | £20–£50 | Solicitor disbursement |
| Land Registry & searches | £200–£400 | Disbursement |
| Bankruptcy/ID checks | £20–£50 | Disbursement |
| Building insurance from completion | £250–£600 | First-year premium |
| Typical total (£200k purchase) | £10,000–£14,000 | Excluding deposit |
For a £200,000 purchase as a second property, expect stamp duty of around £7,500 (standard SDLT £1,500 + 3% surcharge £6,000), plus the items above.
Pre-letting costs
Between completion and first tenant:
| Cost | Typical range | Frequency |
|---|---|---|
| Gas Safety Certificate (CP12) | £75–£120 | Annual |
| EICR (5-yearly) | £150–£300 | Every 5 years |
| Energy Performance Certificate | £60–£120 | Every 10 years |
| Smoke alarms (10-year sealed) | £30–£80 | One-off, replace every 10 years |
| Carbon monoxide alarms | £15–£40 | Replace every 7 years |
| Legionella risk assessment | £0 (DIY) – £150 | Annual |
| Inventory and check-in | £80–£250 | Per tenancy |
| Marketing photos and Rightmove listing (via agent or OpenRent) | £30–£150 | Per tenancy |
| Tenant referencing | £15–£35 per applicant | Per tenancy |
| Right to Rent checks | £0 (DIY) | Per adult occupier |
| Tenancy agreement (template or solicitor-drafted) | £0–£250 | Per tenancy |
| Deposit protection (custodial = free, insured = small fee) | £0–£30 | Per tenancy |
| Light refurbishment / cleaning | £200–£2,000 | Variable |
A reasonable pre-letting budget on a typical buy-to-let: £800–£1,800 plus any decoration or repair work flagged by the survey.
Annual running costs
These hit every year for as long as you let:
| Cost | Typical annual range | Notes |
|---|---|---|
| Landlord insurance | £250–£600 | More for HMO, students, non-standard construction |
| Gas safety inspection | £75–£120 | Required annually |
| Boiler service (separate to gas safety) | £80–£150 | Best practice |
| Letting agent fees (if fully managed) | 10–15% of rent | Negotiable |
| Tenancy renewal fees (if agent-managed) | £50–£250 | At each renewal |
| Accountancy and self-assessment | £150–£500 | Limited company higher (£500–£1,500) |
| Ground rent / service charge (leasehold) | £100–£3,000+ | Read the lease carefully |
| Mortgage interest | Varies | Largest single cost |
| Maintenance reserve | 10% of gross rent | Recommended sinking fund |
| Void provision | 5% of gross rent | Average 2.5 weeks/year vacancy |
| Mid-tenancy inspections (if not via agent) | £0 (DIY) – £100 each | 6-monthly typical |
| Compliance documentation storage | £0 (dashboard) – £100 | Software |
Tax: the cost that surprises people
For a higher-rate personal landlord post Section 24, the effective tax rate on rental profit can exceed 40% once mortgage interest restriction is applied. Worked example on a property earning £12,000 rent with £6,000 mortgage interest and £2,000 of other costs:
- Taxable profit treatment: £12,000 − £2,000 = £10,000.
- Income tax (40%): £4,000.
- Less 20% credit on £6,000 interest: −£1,200.
- Net tax: £2,800.
- Net cash from £4,000 economic profit: £1,200.
Limited companies get full interest deduction at 19–25% corporation tax — often dramatically better at scale.
Use the Section 24 calculator on this site to model your own figures.
Periodic capital costs
Costs that don't hit every year but you should reserve for:
| Cost | Frequency | Typical |
|---|---|---|
| EICR | 5-yearly | £150–£300 |
| EPC | 10-yearly | £60–£120 |
| Boiler replacement | 10–15 years | £2,500–£4,500 |
| Kitchen replacement | 15–25 years | £4,000–£12,000 |
| Bathroom replacement | 15–25 years | £3,000–£8,000 |
| Decoration between tenancies | Per turnover | £500–£2,500 |
| Carpet replacement | 8–12 years | £400–£1,500 per room |
| External painting (windows) | 7–10 years | £800–£3,000 |
| Roof / boiler repairs | Ad hoc | Up to several thousand |
A sensible sinking fund: 10–15% of annual rent earmarked but not spent. Compound it; you'll need it.
The EPC C upgrade — a 2028 budget item
If your property is rated D, E, F or G, you'll need to upgrade to C for new tenancies from April 2028 and all tenancies from April 2030. Typical works to move a D-rated 1930s terrace to C:
- Loft insulation top-up: £400–£800.
- Cavity wall insulation: £500–£1,000.
- LED lighting throughout: £150–£300.
- New efficient boiler (if old): £2,500–£4,500.
- Double glazing (if single): £4,000–£10,000.
- Solid wall insulation (for non-cavity): £8,000–£15,000.
Budget realistically. There's an expected per-property cost cap (likely £15,000) when the rules come in, but you'll still need the cash to spend.
A realistic first-year P&L
Worked example: £200,000 terrace, 75% LTV, let at £1,000pcm via fully managed agent:
| Item | Amount |
|---|---|
| Gross rent (12 × £1,000) | £12,000 |
| Letting agent (12%) | −£1,440 |
| Insurance | −£350 |
| Gas safety + boiler service | −£180 |
| EICR (apportioned 1/5) | −£50 |
| Maintenance reserve (10%) | −£1,200 |
| Void allowance (5%) | −£600 |
| Accountancy | −£250 |
| Mortgage interest (5% on £150k) | −£7,500 |
| Cash profit before tax | £430 |
| Add back: interest not deductible | +£7,500 |
| Tax-deductible expenses base | £3,250 |
| Taxable profit | £12,000 − £3,250 = £8,750 |
| Higher-rate tax (40%) | £3,500 |
| Less 20% credit on £7,500 interest | −£1,500 |
| Net tax | £2,000 |
| Post-tax cash | £430 − £2,000 = −£1,570 |
Yes, a higher-rate personal landlord can run negative cashflow on day one even with a fully tenanted, well-priced property. This is why so many investors now buy through limited companies.
Where new landlords cut corners (and pay later)
- Skipping the EICR ("looks fine"): then a fault causes a fire and insurance refuses.
- Underbudgeting maintenance: small problems become big problems.
- Forgetting accountancy: HMRC discovery assessments back-dated five years.
- DIY tenancy from a 2019 template: rent review and possession routes don't work.
- No void reserve: one bad month wipes out the year's profit.
How to build a sensible budget
- List every cost from this article that applies.
- Use realistic 2026 figures, not 2018 numbers.
- Run gross and net cashflow.
- Add a 10% contingency on top.
- Stress-test for a 2% mortgage rate rise and a 12-week void.
If the property still works, you've got a real investment. If it only works on optimistic assumptions, walk away — there'll be another one.
Further reading
- Buy-to-let for beginners — the wider strategy and yield maths.
- Section 24 tax changes — full worked tax examples.
- Landlord insurance explained — what cover to budget for.
- How to pass an EPC inspection — practical 2028 upgrade roadmap.
Frequently asked questions
How much does it cost to become a landlord in the UK?+
On top of the deposit, plan for £10,000–£14,000 of fees on a £200,000 purchase: stamp duty surcharge, conveyancing, survey, lender fees, insurance and pre-letting compliance.
What annual costs do landlords pay?+
Typically 25–35% of gross rent: insurance, gas safety, EICR/EPC apportionment, agent fees, accountancy, maintenance reserve, void provision, plus mortgage interest and tax.
Are letting agent fees tax deductible?+
Yes, agent fees are a fully deductible expense against rental profit for both personal and limited company landlords.
How much should I budget for maintenance?+
10% of gross rent as a working figure. Older properties, HMOs and student lets need more — 15% is sensible.
How much should I budget for voids?+
5% of annual rent (about 2.5 weeks per year on average). Higher in oversupplied areas, lower in strong rental markets like central Norwich.
Do I need an accountant?+
Not legally, but worth £150–£500 for personal landlords (often paying for itself in tax efficiency). Limited company landlords usually need an accountant for annual accounts and CT600.
What is the +3% stamp duty surcharge?+
An additional 3% on top of standard SDLT for any additional residential property, applied to the full purchase price.
How much does landlord insurance cost?+
£250–£600 a year for a standard single-property let to working tenants. More for HMOs, students or non-standard construction.
What does an EICR cost?+
£150–£300 for a typical 2–3 bed property, required every 5 years. Larger or older properties cost more.
How much will the EPC C upgrade cost in 2028?+
Depends on starting rating. A D-rated 1930s terrace might need £5,000–£15,000 of works. Government cost cap is expected to be £15,000 per property.
Can I claim back start-up costs as expenses?+
Pre-letting expenses incurred in the seven years before letting can be claimed as if incurred on day one — keep all receipts and pass them to your accountant.
What's the most overlooked cost?+
The maintenance and void reserve. New landlords spend the profit instead of reserving 15% of rent for the inevitable boiler, kitchen and void shocks.
Get the tools to handle this confidently
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