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Is it hard to be a landlord? The realities of property investment

More than 90,000 landlords left the UK’s private rented sector in 2025, highlighting the increasing pressure and responsibilities that they face. But while landlords can’t control changes to legislation, such as the Renters’ Rights Act, they can control their level of exposure to risks, including rent arrears and legal disputes. We look at how landlord insurance can help cover costs and minimise the financial burden.  

Updated: 25.08.26

By Clare Waring

A landlord with lots of properties

Does being a landlord generate a passive income? 

Renting out property isn’t simply a matter of handing over the keys and sitting back while tenants pay rent each month. The private rental market in the UK is highly regulated, and as a landlord, you’re expected to fulfil your landlord responsibilities or risk fines or prosecution.  

Even if you’ve inherited property and accidentally became a landlord, the financial pressure is still considerable. As well as ensuring the property meets minimum EPC standards, you’ll also be expected to resolve maintenance emergencies at any time of day, every day of the week. If you also have a full-time job, employing a letting agent to manage your property can help ease the demand on your time, but will also decrease your returns.  

The main challenges of being a landlord today 

Although the market still offers opportunity for entrepreneurial landlords, the sector has changed significantly in a relatively short space of time. Some of the key challenges that you’ll face as a landlord include: 

Stricter regulations and the Renters' Rights Act 

The Renters’ Rights Act is the biggest change to the private rental market and is designed to improve tenant security. In practical terms, it shifts the market in favour of tenants by removing fixed-term tenancies and tightening up the eviction process.  

You’ll also be expected to seriously consider any tenant requests to keep a pet and provide clear reasons if you decline (for example, if they want to keep a large dog in a small flat with no outdoor space).  

Future phased implementation of the Act will also mean you’ll need to register your details on a Private Rented Sector (PRS) database. Not signing up will mean you cannot rent your property.  

To find out more about the Act and to understand your responsibilities, take a look at our in-depth guide to the Renters’ Rights Act.  

Changing tax obligations (Section 24) 

Section 24 is part of the Finance Act 2015 and changes the way landlords are taxed on their rental properties. The changes were phased in and fully in force by April 2020.  

Before the changes were made, landlords could deduct mortgage interest and other expenses from their rental income before being taxed. But under Section 24, landlords must pay tax on all earnings made from renting out property and then claim back mortgage interest, but only up to 20%.  

The tax change was brought in for several reasons, one of which was to prevent higher earners from claiming back large amounts of tax relief. However, if you also receive income from other sources (such as a job), your additional earnings from renting out a property can push you into a higher tax bracket.  

Our guide to Section 24 provides a working example and offers ways to mitigate the impact of the change.  

Maintenance, repairs, and void periods 

Part of your landlord responsibilities means ensuring your rental is fit for ‘human habitation’. Fundamentally, this means keeping up with regular maintenance tasks and ensuring necessary repairs are carried out as soon as possible.  

If you’ve hired a letting agent, you can outsource general and emergency maintenance to them, but if not, you’ll need to resolve issues quickly. If you’re using a letting agent, you’ll still need to budget for repairs.  

You’ll also need to bear in mind that not all tenants will be cooperative and give you (or tradespeople) access to the property to carry out essential repairs or checks (such as gas safety). With that in mind, it’s crucial to keep evidence of communication and be meticulous with record-keeping.  

In addition to ongoing maintenance, you’ll need to consider void periods when the property isn’t rented and generating an income. If you’ve got buy-to-let mortgage payments, you’ll need to ensure you can cover the cost while you’re not receiving a rental income.  

Managing tenant risks and rent arrears

Meeting regulations is just one aspect of being a landlord, but with organisation and experience, compliance should become relatively manageable and routine.  

The one aspect of being a landlord you can never predict is tenant behaviour, and it’s often the human element that makes being a landlord stressful. Disputes over deposits, repairs, the risk of rent arrears, and even malicious damage can cause unnecessary stress. But you can mitigate the financial impact of these risks. 

Landlord policies that include legal & rent guarantee insurance can help cover rent arrears while you regain possession of your property, while standalone legal expenses cover meets the cost of tenant-related legal disputes and can also help during the eviction process. Some insurers will also offer malicious damage cover as an optional extra.  

Is being a landlord still profitable in 2026? 

Housing shortages mean there is a genuine need for rental homes. Depending on where you’re based and the area’s demographic, that can mean there’s plenty of opportunity to benefit. However, although being a landlord can be profitable, to reap the most reward, you’ll need to treat it as a profession rather than as a side hobby.  

If you’re new to being a landlord, you can expect your short-term margins to be tight as you contend with higher buy-to-let mortgage interest rates, initial capital investment costs, and your tax liabilities. The long-term view should be more positive if property prices in your region increase and you build up cash reserves to help cushion any unexpected financial blows.  

How to make being a landlord easier 

You can minimise the stress of renting out property by: 

Using a letting agent 

Letting agents typically take between 10% and 15% of the monthly rent as commission to manage a rental property, but fees vary considerably depending on where you’re based and the services included.  

While this reduces your income, it can save you considerable time and stress. In addition to finding a suitable tenant and managing the tenant referencing process, letting agents usually have a network of trades on their books so they can organise repairs quickly, and they’ll handle all tenant communication (depending on the level of service you choose). 

Treating it as a business 

Owning and renting out property shouldn’t be treated as a hobby (especially if you also hold a full-time job). Treating it as a profession or business enterprise means you’re more likely to spend the time needed ensuring you fulfil your landlord responsibilities. 

As with any business, it’s vital to keep good records, including any correspondence with tenants, inventories, and essential certification (such as gas safety certificates).  

Treating your rental as a business can also help you make decisions based on practicality rather than emotion, for example, replacing carpet with easier-to-clean hardwood, laminate, or vinyl flooring.    

Carrying out detailed tenant referencing  

Although circumstances can change, carrying out comprehensive tenant referencing checks can help minimise the risk of future problems. As well as verifying your tenant’s right to rent (legally required in England), financial checks should demonstrate they can afford the rent you’re charging. You can also ask for references from previous landlords or from an employer.  

You can also ask for a guarantor if you have any concerns about affordability, for example, if prospective tenants are first-time renters or only just meet affordability checks. If you have legal & rent guarantee insurance, it is a requirement of the policy that tenants are referenced and can meet the affordability requirements.  

Getting the right protection 

Landlord insurance that includes features such as malicious damage cover and alternative accommodation can help when there is damage to the property. If you also provide some contents (such as electrical appliances), then don’t forget to protect those items with landlords’ contents cover too. Legal & rent guarantee insurance is increasingly popular, covering unpaid rent while supporting the eviction process.  

Policies should accurately reflect your needs, so insurers will often ask you about the type of tenants you have (for example, if they’re students or professionals). If there’s any change, you should always let your insurer know so they can update your policy if needed. For example, most standard landlord policies won’t cover a property if it’s left vacant for more than 30-90 days (depending on the insurer). If the property is vacant between tenants, or you know the property will be empty for a while, you may need to move to an unoccupied property insurance policy. 

FAQs 

 

Mitigate financial risks with tailored landlord insurance

Change is the only consistent aspect of the private rental market, and it’s up to you to stay informed about regulatory changes – even if you rely on a letting agent to oversee your portfolio. Keeping up to date with legislation and on top of maintenance requests enables you to spread costs and make compliance less stressful for everyone involved.  

As well as staying updated, it’s important to protect your assets, which is where comprehensive landlord insurance can help. To discuss your needs and find out how we can tailor a policy to fit your needs, speak to our team.

Speak to us:  01603 216399

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