Landlords Spend 31 Hours A Month Managing Rentals

Property researchers have stepped into the long-running row between landlords and HMRC over whether letting homes is a business.

HM Revenue & Customs argues that rent is generally non-trading passive income, taxed as an investment, while landlords must show they put significant effort into running their properties to have their buy-to-lets treated as a business.

The latest Landlord Trends report for Q3 2025 from property research firm Pegasus Insight reveals the hard work landlords put in. The findings are split between buy-to-let landlords and house in multiple occupation (HMO) managers as the firm considers them separate activities requiring different levels of input.

The data shows landlords spend an average of 31 hours a month managing rental properties, equivalent to almost four working days.

For landlords with 11 or more properties, the time commitment rises sharply to 78 hours per month, or almost 10 working days, while 57 percent of properties use some form of letting agent service, reported time commitments are broadly similar regardless of whether landlords use an agent.

Investing time and money

The time invested is highest among those with buy-to-let mortgages, HMO holdings, and larger portfolios, reflecting the additional complexity associated with scale and structured borrowing.

Significant activity is the legal threshold for determining whether a property portfolio is a business rather than a passive investment. This distinction is critical for claiming Section 162 Incorporation Relief, which allows landlords to transfer properties from individual ownership to a limited company without paying immediate Capital Gains Tax (CGT).

While not a formal statutory requirement, HMRC's Capital Gains Manual (CG65715) and the tax case Ramsay v HMRC (2013) set that spending 20 hours or more per week managing a portfolio is generally sufficient to qualify as a business.

Other takeaways from the report included:

• Buy-to-let landlords spend 25 percent of average gross rental income on running costs, while HMO landlords spend 45 percent
• Average annual running costs reach £19,604 for buy-to-lets and £35,720 for HMOs
• Property maintenance and repairs account for 31 percent to 39 percent of landlord expenditure
• Higher compliance and upkeep costs continue to squeeze margins despite strong yields

The report also reveals that the average buy-to-let portfolio generates gross income of £79,000 a year.

Growing cost pressures

The main difference in spending between HMO and buy-to-let landlords is the cost of utility bills, which is more than four times higher for HMO landlords (16 percent v. 4 percent) who more commonly include these in the rent they charge.

The findings come despite strong rental yields, underscoring the growing cost pressures landlords face as they seek to maintain standards and comply with increasingly stringent regulations.

Pegasus Insight director Mark Long 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."