Average rental arrears climbed to a record £2,281 in the first quarter of 2026, according to Reposit, but the pace of growth slowed sharply to 2 percent year on year as pressure in the rental market began to ease.
For landlords, the change matters as much as the headline number. Arrears are still rising, and the average shortfall now sits well above a standard five-week cash deposit. But after two years of much steeper increases, the latest figures point to a market that may be settling rather than deteriorating further.
Arrears remain high despite slower annual growth
Reposit said the average arrears value rose from £2,237 in Q1 2025 to £2,281 in Q1 2026. That is a modest annual increase compared with the previous jump of 23 percent between Q1 2024 and Q1 2025, and the 27 percent rise recorded a year earlier.
The company said the latest trend broadly matches wider signs of strain easing elsewhere in landlord finance. This follows Landlord Knowledge’s March report on falling arrears values but rising case numbers, which suggested fewer large shocks even as payment problems remained a live issue across the private rented sector.
Reposit also pointed to UK Finance figures showing 9,520 buy-to-let mortgages were in arrears by more than 2.5 percent of the outstanding balance at the end of Q4 2025, down by 910 on the previous quarter. That does not remove the risk for landlords, but it does suggest the worst of the recent upward pressure may be passing.
Deposit gap leaves landlords exposed
The figures also underline a practical problem for landlords when tenants fall behind. Reposit said the average traditional deposit stands at £1,308, which is £973 below the average arrears value now being recorded.
Ben Grech, chief executive of Reposit, said landlords were becoming more cautious as affordability pressure and legal change combined. He said: “We know that landlords are becoming increasingly risk-averse, placing greater emphasis on financial security and tenant reliability.
“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.”
Grech added that alternatives to traditional deposits were gaining attention because landlords wanted stronger protection while tenants wanted to avoid locking away large sums at the start of a tenancy. Landlords weighing those options have already seen similar pressure in the protection market, as shown in Landlord Knowledge’s earlier coverage of longer rent guarantee products launched as reform risk grows.
Reposit’s full update says its insurance-backed model is designed to guarantee payment to landlords if tenants default on charges usually covered by a cash deposit. The company says disputes are resolved through an independent service within 14 days. More detail is available on Reposit’s research and blog pages.
What this means for landlords
- If you’re reviewing tenant risk: record-level arrears still justify close checks on affordability, income security and guarantor arrangements.
- Watch for: whether the slower annual rise turns into outright falls later in 2026, especially if mortgage rates and inflation keep easing.
- Bottom line: arrears pressure has not gone away, but the data points to a more stable market than landlords faced a year ago.
Editor’s view
Landlords do not need another headline telling them arrears are expensive. The more useful signal here is that growth in arrears is slowing, which may give some investors confidence that tenant finances are no longer worsening at the same pace. Even so, the gap between average arrears and the protection offered by a standard deposit remains large enough to keep risk management high on the agenda.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 14 May 2026
Sources: Reposit, UK Finance
Related reading: Rental arrears values fall 8% but case numbers continue rising
