Recent research by Pegasus Insights, highlighted by What Mortgage reveals a sobering reality for many UK landlords: running costs on residential investment properties are absorbing up to 25% of rental income (for HMO’s is 45%).
A quarter of your rental income gone.
While many landlords may just accept this as “just part of the game,” the truth is different. A large portion of these costs are driven not by the market — but by the type of property you own.
And this is where buying brand-new, high-quality homes changes everything.
The Money Pit
Older properties don’t just carry character — they often carry significant cost. Tom Hanks and Shelley Long found this out in the famous 1980’s movie of the same name!
Boilers fail. Roofs leak. Damp creeps in. Windows deteriorate. Electrics become outdated. Cosmetic wear accelerates tenant turnover. Energy inefficiency drives complaints and pressure on heating systems.
Each issue on its own feels manageable. But collectively, they chip away at rental income month after month, year after year.
Add to that:
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More frequent maintenance call-outs
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Greater void risk
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Higher tenant churn
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Ongoing compliance upgrades
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Unexpected capital expenditure
It’s easy to see how running costs spiral.
Why Brand-New Homes Dramatically Reduce Running Costs
Modern, newly built homes are designed to eliminate many of these pressures from day one.
Lower Maintenance
Everything is new — heating systems, electrics, roofs, windows, kitchens, bathrooms. Fewer reactive repairs mean fewer surprise bills.
Warranty Protection
Most new homes come with 10-year structural warranties and initial defect cover, shifting major repair risk away from the landlord.
Superior Energy Efficiency
Built to current building regulations, new homes are significantly more energy efficient. Lower strain on systems means longer lifespan and fewer breakdowns.
Better Tenant Experience
Modern layouts, insulation and finishes attract longer-term tenants who stay put — reducing void periods and reletting costs.
When you combine these factors, the effect on net yield is powerful.
It’s Not About Yield — It’s About What You Keep
Too many investors focus on headline rental yield while ignoring how much of that income disappears through avoidable costs.
If landlords are losing up to 25% of income to running costs, the solution isn’t just to chase higher rent — it’s to own better assets.
Brand-new freehold houses in strong residential areas offer:
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Built where the demand is.
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Lower reactive expenditure.
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Reduced tenant turnover.
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Minimal structural risk.
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Greater long-term stability.
That’s how you protect your profit margins.
Final Thought
In today’s market, the real question isn’t “What rent can I achieve?”
It’s “How much of that rent do I actually keep?”
The landlords who consistently build wealth aren’t necessarily earning more — they’re losing less.
And choosing high-quality, brand-new homes is one of the most effective ways to dramatically cut running costs and strengthen long-term returns.
