"While there are early signs that arrears are beginning to stabilise, they remain slightly elevated, as both landlords and tenants continue to feel the impact of sustained cost pressures"
- Ben Grech - Reposit
Average rental arrears reached a new high of £2,281 in the first quarter of 2026, according to data from deposit alternative provider Reposit, underscoring the continued financial pressure on tenants amid the cost of living crisis. The pace of increase, however, has slowed sharply.
Arrears grew by just 2% year on year in Q1, a stark contrast to the 27% surge recorded between Q1 2023 and Q1 2024 and the further 23% rise between Q1 2024 and Q1 2025. The deceleration points to a gradual stabilisation in the market after several years of steep increases.
That picture is reinforced by UK Finance figures showing 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, down 910 on the previous quarter. Affordability pressures have not disappeared, though, with interest rates remaining at 3.75% and inflation averaging around 3.2% through Q1.
"We know that landlords are becoming increasingly risk-averse, placing greater emphasis on financial security and tenant reliability," said Ben Grech, chief executive officer of Reposit (pictured).
"While there are early signs that arrears are beginning to stabilise, they remain slightly elevated, as both landlords and tenants continue to feel the impact of sustained cost pressures. With the Renters' Rights Act now in place and the abolition of Section 21 no-fault evictions, landlords are understandably becoming more cautious, given the reduced flexibility in how they manage tenancies."
The gap between the average deposit and the average arrears value adds a further dimension to the challenge. The average traditional deposit stands at £1,308, leaving landlords £973 short of the average arrears value if a tenant falls behind.
"In this environment, solutions that reduce risk, improve affordability and provide greater protection for landlords will play a key role in supporting a more balanced and resilient rental market," Grech added.
"At the same time, they enable renters to retain access to their money and use it for immediate needs, such as moving costs, or to invest for a return, rather than locking the money away for several years."
