How much does it cost to become a landlord?

Getting onto the property ladder has been something many strive for in the hopes of building wealth through passive income. But not everyone will know how much it costs to become a landlord. Entering the rental market in 2026 is no longer as simple as putting down a deposit and collecting rent. There are many new regulations that landlords need to remain compliant with, which adds to the total amount of money you need to be able to become a successful landlord. 

If you are a first-time buyer who is looking to get into the world of property investment, you need to look beyond the property price and keep in mind the various other costs that are associated with being a landlord. Here, we’ll look at how much money you need to become a landlord, focusing on three critical phases – acquisition, compliance and monthly outgoings. 

Phase 1: The acquisition (upfront capital)

The biggest hurdle for anyone looking to invest in property is the initial amount of money you need. Unlike residential mortgages, where 10% deposits are the usual amount, rental properties operate on a much higher deposit percentage. 

The 25% deposit rule

Many buy-to-let mortgages still require a minimum 25% deposit, although some lenders do offer up to 80% LTV (meaning a 20% deposit) in certain cases. Higher-LTV products can come with tighter eligibility criteria and may carry higher rates or fees, so a 25% deposit remains a common rule of thumb for landlords. For example, on a property worth £250,000, a 25% deposit would be £62,500.

Stamp duty land tax (SDLT) surcharges

Stamp duty is typically the most underestimated cost when it comes to looking at how much it costs to become a landlord.  If you already own a home, any further property investment will attract a 5% surcharge on top of standard residential rates. 

For a property valued at £250,000, you can expect your stamp duty to look like: 

• 0% on the first £125,000 (+ 5% surcharge) = £6,250
• 2% on the portion between £125,001 and £250,000 (+ 5% surcharge) = £8,750
• Total Stamp Duty: £15,000

Professional and legal fees

Next, you’ll need to consider professional and legal fees when figuring out how much money you need to become a landlord. For example: 

• Conveyancing: Budget between £1,000 and £2,000 for a solicitor experienced in buy-to-let transactions.
• Surveys: you’ll need to conduct a valuation survey for your lender and a more detailed Level 2 or 3 survey to be able to spot any structural issues before they become a financial burden. These cost anywhere between £500 and £1,000. 
• Mortgage broker fees: Most brokers will charge a flat fee or a percentage to be able to navigate the rental market. 

Phase 2: The compliance setup 

The next set of costs that are involved in the process of investing in a rental property includes those related to compliance. If you refuse to remain compliant because you don’t want to spend the money, you could be charged with fines up to £30,000. 

Mandatory safety certificates

So, when looking at how much money you need to become a landlord, keep these costs in mind: 

• Gas safety certificate (CP12): You will be required to update these annually. They cost between £60 and £120. 
• EICR (Electrical safety): These are required every 5 years, and for a standard 3-bed house, you can expect to pay £150–£350. Also, if the report finds any dangerous issues, you can expect to pay more for repairs. 
• EPC (Energy Performance Certificate): You may be aware that the government is pushing for all properties to reach a ‘C’ rating by 2030, so you’ll need to make sure that you have a valid EPC, too. New certificates cost between £60 and £120. You’ll also need to take into consideration the costs involved with upgrades (double glazing, insulation) in order to get the right rating. 

Licensing and registration

Depending on where your property is located and the type of property you own, you may need a landlord licence from your local council. These can cost anywhere from £500 to £1,500 and usually last for five years. You’ll also need to register with the Information Commissioner’s Office (ICO) for data protection purposes (£35–£60/year).

Phase 3: Monthly outgoings

Once you have managed to secure your property and the certificates needed to remain compliant, you’ll need to budget for monthly outgoings. When calculating how much it costs to become a landlord, you’ll need to factor in repairs and fair wear and tear. 

Maintenance 

The golden rule for this is the 1% rule, where landlords set aside 1% of the property’s total value every year for repairs. So, for a property valued at  £250,000, you’ll set aside £2,500 per year or roughly £200 a month. This would include repairs to leaking boilers and roof repairs. 

Letting agent fees

Are you going to manage the property on your own, or are you going to use a letting agent? If so, you’ll need to keep the following costs in mind: 

• Tenant find only: If you only need a letting agent to find you tenants, this will usually cost one month’s rent.
• Full management: If you need the agent to manage the whole process, you should look at budgeting 10% to 15% of the monthly rent. Many landlords like to employ an agent to fully manage the property so that they can handle compliance effectively.

Making tax digital (MTD) and software

As of April 2026, landlords with a gross income of over £50,000 will be required to use MTD software in order to submit quarterly updates to HMRC. Here are the costs you can expect to be included:

• Software costs: Aim to budget for up to £30 per month for MTD software that is compliant with bookkeeping standards. 
• Accountancy: Due to the increase in the frequency with which you will need to report on your finances, your accountant may increase their fees slightly. 

Specialised landlord insurance

You will not be able to rely on standard house insurance, so when looking at how much money you need to become a landlord, you’ll need to factor in landlord insurance instead. At CIA Landlord Insurance, we have a team of specialists who can guide you in making the best decision when choosing landlord insurance for your rental property.

So, how much money do you need to become a landlord?

Let’s take a realistic look at the figures involved in becoming a landlord. Please note that these are market estimates: 

So, while the cost of your property may be higher than this total, the actual cost that will be needed upfront is the figure you should focus on. When you rent out your property, you can use your rental income to pay off your mortgage. 

Are you looking for landlord insurance to help protect your rental property? Be sure to get in touch with our team of specialists for a quote today on 01788 818 670, or you can visit our advice centre for more information on how to manage your rental property.