Rental arrears may be easing across the country, but tenants could still face tougher referencing processes as the Renters’ Rights Act moves closer to implementation. The latest figures suggest that while fewer renters are falling behind, the shifting legal framework may push landlords to scrutinise applicants more closely.
Recent data from Reposit shows that the total value of unpaid rent has continued to decline for the third quarter in a row. In Q3 2025, average arrears stood at £1,824, which is a notable drop of 13% compared with the previous quarter and a 23% reduction from the start of the year. This fall suggests that tenants, in general, are struggling less with keeping up with payments.
However, Reposit warns that the forthcoming changes under the Renters’ Rights Act could still encourage landlords to tighten their checks. The Bill raises the arrears threshold for issuing a Section 8 eviction notice from two months to three months, giving tenants more breathing room but leaving landlords exposed for longer.
Alongside the overall value of arrears dropping, the frequency of cases has also reduced. According to the figures, the number of arrears cases fell by 29% compared with Q2, indicating a broader improvement in tenants’ ability to manage rent commitments.
Reposit suggests that this reduction in arrears may be linked to a slight cooling in rental price growth. While rents are still rising across much of the country, the rate of increase has slowed compared with earlier months.
The latest Office for National Statistics (ONS) data shows that average private rents in the UK reached £1,354 per month in the year to September 2025. Although this marks a 5.5% rise, it is marginally lower than the 5.7% annual growth recorded in August, signalling a small but meaningful shift.
Despite these improvements, concerns remain about how the Renters’ Rights Act will affect the eviction process. The increase to a three-month arrears requirement means repossessions may take longer to progress, especially for landlords relying on rent to cover mortgage or operational costs.
For tenants who pay weekly or fortnightly, the threshold is now set at 13 weeks of arrears instead of the previous eight. This change gives tenants more protection but also prolongs the period before a landlord can issue a Section 8 notice.
Ben Grech, chief executive of Reposit, believes these changes will prompt landlords to be more selective during referencing. He says that while falling arrears are encouraging, many landlords remain at financial risk due to the size of arrears often outstripping the value of traditional deposits.
Grech highlights that average arrears now exceed £1,800, whereas the typical cash deposit is around £1,380. This gap leaves many landlords inadequately covered when tenants fall behind, particularly in higher-rent areas.
With legislation shifting and borrowing costs still elevated, landlords are increasingly prioritising risk management. This could mean enhanced affordability checks and more detailed referencing criteria for prospective tenants.
Grech adds that the broader rental market is becoming more cautious, shaped by slower rent growth, new legal obligations, and tighter financial circumstances. Both landlords and tenants will need to adapt to this more cautious environment to ensure tenancies remain secure.
The wider buy-to-let sector also shows mixed signals. Data for Q3 2025 indicates a very slight increase in BTL arrears, rising by 0.1%, suggesting some continued strain among landlords despite the overall downward trend in arrears.
At the same time, Direct Debit Rejections (DDRs), which reflect failed rent payments, dropped by 7.9%. This provides another sign that tenants are becoming more consistent in meeting their rent obligations.
Average claim values have also declined for the third quarter running, now sitting at around £983. Although the number of claims has risen since Q2, Reposit notes that this is typical for the time of year and remains consistent with previous Q3 patterns.
In summary, while the rental landscape appears to be stabilising, the evolving legislation means landlords are likely to adopt stricter vetting processes. Tenants may therefore need to prepare for more intensive affordability checks, even as overall arrears continue to trend downward.
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