HM Revenue and Customs published its 2026 property rental income statistics on 28 August 2026, covering the five tax years to 2024 to 2025. The headline is a divergence. Across the 2.88 million unincorporated landlords in the data, total declared property income was flat at £58.99 billion, against £59.00 billion the year before. Total allowable expenses rose 11 per cent to £34.75 billion.
This is Self Assessment return data, which excludes companies and counts claimed costs only. The cost side is moving and the income side is not.
What HMRC actually counted
The release covers landlords who declare rental income through Income Tax Self Assessment: 2.85 million individuals plus around 30,000 partnerships. Incorporated landlords pay Corporation Tax and file no such return, so they are absent, along with landlords taxed through PAYE and anyone below the reporting threshold.
Property income here means total rents and other income from property, before costs. In 2024 to 2025, 2.54 million landlords, or 87.7 per cent of those in the data, claimed at least one category of expense.
Residential finance costs came to £12.82 billion, claimed by 1.15 million landlords, 39.8 per cent of them. Repairs and maintenance came to £6.41 billion, legal, management and professional fees to £4.16 billion, and rent, rates and insurance to £3.81 billion. Those are operating costs. The largest line is financing.
The biggest landlord cost is not deductible
Residential finance costs are 37 per cent of everything claimed, which makes them the largest line in the landlord cost base, twice the size of the next biggest. The category covers interest on borrowing to buy the property, plus loan arrangement and other finance costs. HMRC does not publish the split between them. It is also the one line that does not reduce an individual landlord’s taxable profit.
HMRC says so itself. Its background and quality report defines allowable expenses as costs that can usually be deducted from property profits, then states that residential finance costs “cannot be deducted directly from property profits” and are counted as allowable expenses for this publication only. That is the Section 24 restriction, in force in full since 6 April 2020, which replaced the deduction with a basic rate tax reduction. We set out how the calculation works in our note on Section 24 and limited companies.
For the four in ten landlords who carry this cost, a large share of what they pay out leaves the account without reducing the profit they are taxed on. Cash position and tax bill are two different numbers, and the gap widens every time interest costs rise.
Costs rose twice as fast as income
In 2020 to 2021, landlords declared £46.69 billion of property income and £22.33 billion of expenses. By 2024 to 2025 income had reached £58.99 billion, a rise of 26 per cent, while expenses had reached £34.75 billion, a rise of 56 per cent. Costs grew at more than twice the rate of income.
On HMRC’s own totals, claimed expenses were 48 per cent of declared property income in 2020 to 2021 and 59 per cent in 2024 to 2025. Read that as a whole-population figure and not as an individual margin, because the income total covers 2.88 million landlords and the expense total covers the 2.54 million who claimed anything.
The per-landlord averages point the same way. Average declared income reached £20,500 in 2024 to 2025, up from £20,300, while average declared expenses reached £13,700, up 12 per cent from £12,300. These averages use different denominators too, so subtracting one from the other does not give a typical landlord’s margin.
The obvious counter deserves an answer. Rising declared expenses could mean landlords are claiming more diligently, or spending more on properties they keep. Two things argue against that. The largest component is finance costs, and a landlord does not set the rate. And HMRC states its 2026 edition is internally consistent across all five years, with its corrections affecting only comparisons with earlier editions.
What the landlord data does not show
Regions are assigned from the landlord’s own postcode rather than the property’s, so this is where owners live, not where the stock is.
The distribution matters too. Around 1.3 million landlords, close to half of those in the data, declared property income of £10,000 or less in 2024 to 2025. That band has shrunk from 1.55 million in 2020 to 2021, while seven of the nine bands above £20,000 have grown and the other two are flat. That is consistent with smaller landlords leaving, and equally consistent with existing landlords’ income rising into higher bands. It is a shift in who sits where, not proof of who bought whom.
We work with both buyers and sellers, so we have a commercial interest in how this is read. Nothing in this release, on its own, says it is time to sell. It is a finding about a cost base, and it should change how you underwrite, not whether you exit.
What this means for property investors
If you own rental property, price your cost base from your own returns. A rule of thumb will be years out of date. Take your declared expenses as a percentage of your rents for each of the last three years and see which way your own line is moving, against a national shift from 48 to 59 per cent. If yours is rising faster, ask which category drives it, because a finance-cost problem, a repairs problem and a management-fee problem have three different fixes. Anyone with borrowing in personal names should also run the numbers against the 2027 property income rates of 22, 42 and 47 per cent, set by section 7 of the Finance Act 2026 for the 2027 to 2028 tax year. They land on this cost base instead of replacing it. Separate provisions for Scotland and Wales sit in the same Act but are not yet in force, so check your own position before you model it.
If you are buying, treat any projection built on a 2021 expense assumption as out of date and ask which categories have actually been carried since. If you are selling, run the same check before you go to market, because the figure you can evidence from three years of returns is the one that survives underwriting.
This is general information, not advice on your position, so take your own before acting. If you want your own numbers, ask for a free property valuation and we will show the yield working, or see what is on our books in investment properties for sale.