Buy-to-Let Operating Costs

The costs in managing and maintaining the property, including administration and loss of rent when the property is vacant or through bad debts, account for the difference between the gross rent and the net rent. The net rent is the money available to service a loan, before any profit can be taken.

The IPD has been tracking and publishing investment data for the UK residential investment sector for 12 years. They report that the average loss of gross to net income on residential lettings ranges typically from 33% to 35%. Their figures are based on reports by large institutional investors, not small buy-to-let landlords.

There are no national statistics on the operating costs of smaller landlords in the private rented sector in the UK. The information is confidential to each buy-to-let landlord. The nearest we get to a public record are figures released by HMRC in 2013 in response to a Freedom of Information request and published by the Intergenerational Foundation:

Unfortunately they did not publish the percentage of the gross rental income which these deductions represent.
Given the uncertainties, it might be wise to budget for between 30% and 35% of the gross rent to be spent meeting operational costs, until you build up sufficient experience to judge differently. Our