Rising Compliance Costs for Landlords — Why It’s Getting More Expensive to Let Property
Compliance Costs - Where Does It End
If you’ve been running investment properties in recent years, you’ve almost certainly noticed that compliance costs are rising sharply. What once felt like a manageable set of checks and certificates has become an increasingly expensive and time-consuming part of letting property.
Below is an overview of the key areas where costs are increasing, what’s driving the trend, and what landlords need to be thinking about going forward.
1. General Cost Burden Is Increasing
Industry research shows that landlords are spending a significant proportion of rental income simply on running costs, including maintenance, servicing, insurance, utility bills, professional fees, and compliance itself. Depending on the type of property, this can be between 25% and 45% of gross rental income.
This broad rise in costs reflects both:
Higher Interest Rates on Borrowing
Materials and labour inflation
Higher regulatory and documentation requirements
2. More Rules = More Things You Must Do
Over the last few years, the number of compliance requirements for landlords has expanded considerably. Some of the most significant examples include:
EPC (Energy Performance Certificate)
The minimum EPC requirement is set to rise further in coming years, with proposals to move to a C rating for all tenancies, for some properties this will require significant investment in insulation, boilers and general upgrades.
Safety Checks
Landlords must still undertake:
Annual Gas Safety Checks
Electrical Safety Checks (usually every 5 years)
Fire Risk Assessments (where applicable)
Legionella risk assessments
Each one often requires a qualified inspector, and the ability to prove compliance in writing.
Licensing
Selective (and additional) licensing schemes are spreading across councils, with fees and administrative work attached. Average selective license fees can be several hundred pounds per property or as in last weeks email - up to £800 per property and failure to comply can result in significant fines.
Landlord National Registration (Coming Soon)
Under the new renters’ rights reforms, landlords will also need to register nationally to a landlords database and provide documentary evidence of compliance as part of that process.
All of these add layers of costs, administration, and risk.
3. Enforcement Powers Are Increasing
The forthcoming Renters’ Rights Act doesn’t just bring new obligations it gives councils expanded investigatory and enforcement powers. From late 2025 onwards, councils can require documents, enter premises (in some cases without a warrant), and pursue civil penalties or other sanctions if compliance can’t be shown.
That means landlords and agents are not only implementing new requirements, they are actively expected to prove compliance and local authorities are obliged to enforce the law more stringently.
4. Why These Costs Matter to Your Business
For many landlords especially those with smaller portfolios, compliance costs now represent a significant proportion of net income:
EPC upgrades can run into thousands of pounds per property.
Licensing and checking add recurring fees every year or every few years.
Increased enforcement means no-compliance risk has a financial consequence.
These costs are not optional; they are legally required, and ignoring them can lead to:
Civil penalties
Loss of legal eviction rights
Even criminal sanctions in serious cases
5. Market Impacts: Landlords, Renters and Supply
There are broader implications beyond individual pocketbooks:
Some commentators argue that rising compliance costs may push smaller landlords out of the market, reducing supply and driving rents higher.
Others warn that tenants could end up bearing the brunt of these costs if landlords pass them on via rent increases.
Whether that happens — and how far — will be shaped by rental demand, property supply, and regional affordability.
How to Prepare (Not Panic)
Landlords who stay ahead of compliance costs tend to manage them better. Some practical steps include:
Budget for compliance costs upfront, not reactively
Keep track of all required certificates and expiry dates
Factor compliance into rent modelling and cashflow planning
Understand local licensing rules and fees early
Use qualified professionals for inspections and paperwork
The goal isn’t to complain about compliance, it’s to anticipate it and include it as a core part of running your rental business.
As a side note, in my experience, landlords who tend to struggle the most are those who are highly leveraged. While withdrawing equity or funds from a rental property may seem like a good idea at the time, it can significantly weaken the investment over the long term. Increased borrowing raises baseline costs, which ultimately reduces profitability and can cause the property to cost more than it yields.
It is always advisable to have a clear financial plan. Some landlords choose to remain on interest-only loans indefinitely, while others opt for capital and interest repayments so the investment strengthens over time. Either approach can be appropriate, but having a contingency plan is essential. Ideally, the strongest position is a portfolio with no finance costs; in that scenario, compliance and regulatory changes have far less impact on overall returns.
If you plan to continue investing, it may be worth considering which ownership structure you use going forward. My next blog will explore the differences between holding property in a personal name versus through a limited company.
Summary: Compliance Costs Are Not Temporary
Compliance isn’t a one-off tick-box, it’s an ongoing operational cost that’s increasing in both scope and financial impact. From energy performance to licensing, safety checks to enforcement, landlords must budget time, money, and attention to remain legally compliant.
While these changes aim to improve tenant safety and quality of housing, the cost implications for landlords are real and growing.