Average rental arrears in the UK have reached a new record of £2,281 in the first quarter of the year, according to data from Reposit. While the figure marks a fresh peak, the latest figures also suggest that the pace of growth is starting to slow, pointing to possible early signs of stabilisation across the rental market.
Year-on-year, arrears increased by 2%, which is a much softer rise compared to previous periods. This contrasts sharply with the rapid increases seen in earlier years, when arrears jumped by 27% between Q1 2023 and Q1 2024, followed by a further 23% rise between Q1 2024 and Q1 2025. The latest data therefore suggests that although arrears remain high, the sharp upward trajectory may be easing.
This shift is being viewed as a sign that some of the pressure in the rental sector is beginning to level out, even if overall affordability challenges remain firmly in place. Both landlords and tenants continue to face ongoing financial strain, meaning that any stabilisation is happening against a difficult economic backdrop rather than in improved conditions.
Additional market data supports this mixed picture. Figures from UK Finance show that at the end of Q4 2025, there were 9,520 buy-to-let mortgages in arrears of more than 2.5% of the outstanding balance. However, this was a reduction of 910 cases compared with the previous quarter, suggesting that mortgage arrears may also be starting to ease slightly in parallel with wider rental trends.
Even so, affordability pressures remain a key concern across the UK housing market. Interest rates are still elevated at around 3.75%, while inflation has averaged approximately 3.2% during Q1. These conditions continue to place pressure on household budgets, particularly for renters already struggling with high monthly costs.
Landlords becoming more cautious amid policy and cost pressures
Ben Grech, chief executive of Reposit, highlighted that landlords are increasingly adopting a more risk-averse approach in response to ongoing uncertainty. He explained that while arrears growth appears to be stabilising, levels remain relatively high due to sustained cost pressures affecting both landlords and tenants.
He also pointed to recent regulatory changes, including the introduction of the Renters’ Rights Act and the abolition of Section 21 “no-fault” evictions, as factors contributing to a more cautious outlook among landlords. With reduced flexibility in managing tenancies, landlords are placing greater emphasis on financial security and tenant reliability.
Grech noted that the average traditional tenancy deposit now stands at £1,308, which is significantly lower than the current average arrears level. This gap highlights the financial exposure that can exist when arrears occur, particularly in cases where tenants fall behind on payments for extended periods.
Against this backdrop, there is growing interest in solutions that aim to reduce upfront costs for tenants while also offering stronger protection for landlords. According to Grech, these approaches could help create a more balanced and resilient rental market by easing affordability pressures without increasing risk for property owners.
He also suggested that such solutions may benefit tenants by freeing up savings that would otherwise be locked into large deposits. Instead, this money could be used for moving expenses, emergency costs, or short-term financial flexibility, rather than being held for the duration of a tenancy.
A market still under pressure, but shifting direction
While the latest figures do not point to a full recovery, they do suggest that the rapid escalation in rental arrears seen in recent years may be slowing. The combination of stabilising arrears growth, slight improvements in mortgage arrears data, and evolving landlord behaviour all indicate a market in transition rather than continued acceleration.
However, with inflation and interest rates still elevated, affordability challenges are likely to remain a defining feature of the rental sector for the foreseeable future.
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