Average rent arrears have continued to rise, reaching £2,237 in the first quarter of 2025. This marks a significant 23% jump from £1,818 during the same period last year.
The figures, released by deposit alternative provider Reposit, also highlight a broader trend. Compared to the first quarter of 2023, rent arrears have surged by 56%.
Separate research based on data from the Tenancy Deposit Scheme (TDS) and analysed by FCC Paragon found that rent arrears were behind one in five lettings disputes last year. A total of 9,784 disputes involved unpaid rent – representing an 80% year-on-year increase.
Reposit has warned that these ongoing financial pressures, combined with the implications of the Renters Rights Bill, are leading more landlords to exit the rental market altogether.
The supply of available rental homes has fallen dramatically. By the end of Q1 2025, there were just 284,000 rental properties across the UK, a record low. This figure is 18% lower than in Q1 2024 and 23% down compared to pre-pandemic levels in 2019.
As a result, rents are continuing to rise. The average monthly rent now stands at £1,095, putting additional pressure on tenants already struggling with affordability.
Ben Grech, chief executive of Reposit, explained that landlords are under increasing financial strain. As rental prices have grown, the risk they face from tenant arrears has also gone up.
The average cash deposit for rental properties now stands at £1,261, which is significantly lower—by £976—than the average value of rent arrears. This difference highlights the shortcomings of traditional deposit schemes, which generally provide only around five weeks’ worth of financial protection for landlords. Given the rising costs associated with rent arrears, many are beginning to question whether these conventional deposit amounts are sufficient to cover the losses landlords face.
In addition to rent arrears, costs related to damages and cleaning have also been on the rise. According to recent data, the average charge for damages and cleaning (excluding arrears) reached £1,355 in the first quarter of 2025. This figure marks an 18% increase compared to the same period last year. The situation is further complicated by the new Renters’ Rights Bill, which places additional responsibilities on landlords to accommodate tenants’ requests for pets in their properties. This change has heightened concerns among landlords about the potential for increased property damage, adding to their financial risks.
While charges connected to rent arrears have surged when comparing year-on-year data, there was a notable 14% decrease from £2,592 in the last quarter of 2024. Experts believe this drop is influenced by seasonal factors, particularly the financial pressures tenants experience during the lead-up to the Christmas period. Many renters tend to tighten their budgets over the festive season, which may temporarily reduce the incidence of arrears.
These figures illustrate the growing financial challenges faced by landlords as the rental market continues to evolve. With rising arrears and damage-related costs, there is increasing pressure on both tenants and landlords to find balanced solutions that protect all parties involved. The current deposit structures and landlord protections may need to be reviewed to better reflect the realities of today’s rental market.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property