The average value of rental arrears fell 8% last year but more tenants are falling into difficulty, highlighting the ongoing financial pressures facing both landlords and renters.
Data from deposit replacement provider Reposit shows average arrears dropped from £2,143 in 2024 to £1,980 in 2025. Claims values also declined marginally, falling from £1,207 to £1,178 – a decrease of just over 2%.
However, the frequency of cases edged up over the year, meaning while the scale of debt per case was lower, more tenants fell into difficulty.
Deposit shortfall exposed
The data reveals a significant gap between typical deposit levels and actual arrears. The average cash deposit now stands at £1,296 – some £629 below the average arrears value of £1,980.
This follows Landlord Knowledge’s recent analysis of affordability pressures in the rental market, with benefit rates falling further behind actual rents.
The fall in arrears values may reflect cooling rental growth. ONS data shows average UK monthly rents rose 4.0% to £1,368 in the 12 months to December 2025, down from 4.4% growth in the 12 months to November.
BTL mortgage arrears improving
Wider mortgage data points to improving conditions for landlords themselves. UK Finance recorded 9,520 buy-to-let mortgages in arrears of 2.5% or more in Q4 2025 – 9% fewer than the previous quarter. Meanwhile, 770 buy-to-let properties were taken into possession during the same period, down 14%.
The improving picture for landlord arrears comes as Section 8 eviction costs rise under the Renters Rights Act, making early intervention on tenant arrears increasingly important.
Ben Grech, CEO of Reposit, said: “It’s encouraging to see the average value of arrears and claims falling. However, the marginal rise in case volumes shows that financial pressure across the sector remains.”
“The Renters Rights Act is creating a more complex operating environment for landlords, fundamentally changing how arrears and repossessions are managed. With the abolition of Section 21, many landlords are understandably becoming more cautious in their approach to rent arrears.”
Grech noted that the average cash deposit of £1,296 falls £629 short of average arrears values, highlighting the limitations of traditional five-week deposits when arrears escalate.
What this means for landlords
- Deposit gap: Standard five-week deposits may not cover serious arrears – consider rent guarantee insurance or deposit alternatives
- Early intervention: With Section 21 abolished, addressing arrears promptly through Section 8 Ground 8 (two months arrears) is essential
- Reference thoroughly: Rising case numbers suggest more tenants are struggling – robust affordability checks remain critical
- Monitor closely: Smaller average arrears but more cases suggests problems are being caught earlier – maintain regular rent monitoring
- Budget for voids: The RRA’s longer possession timescales mean arrears situations take longer to resolve
Editor’s view: The headline numbers look positive – lower average arrears, fewer BTL repossessions. But the rise in case volumes tells a different story. More tenants are falling into difficulty, even if they’re not falling as far. For landlords, the message is clear: the five-week deposit cap leaves significant exposure. Whether through insurance, guarantors, or alternative deposit products, closing that £629 gap should be a priority.
Author: Editorial Team
Published: 4 March 2026
Sources: Reposit, ONS, UK Finance
Related reading: Section 8 evictions to cost landlords £3,000 as RRA takes effect
