"Landlords have been facing sustained cost pressures for some time, and as rents have continued to rise, their exposure to tenant arrears has increased"
- Ben Grech - Reposit
The average value of rent arrears has jumped 23% year-on-year to £2,237 in the first quarter of 2025, up from £1,818 in the same period last year, according to new figures from deposit alternative provider Reposit.
This marks a 56% rise compared to Q1 2023, highlighting mounting pressure on both tenants and landlords. High interest rates and persistent inflation continue to drive up the cost of living. Data from the Office for National Statistics covering the period from 5 to 30 March 2025 found that 66% of adults reported an increase in their living costs.
Rent arrears are also becoming a more common cause of formal disputes. Separate data from the Tenancy Deposit Scheme (TDS), analysed by FCC Paragon, shows that 20% of all lettings disputes in 2024 were due to rent arrears. That equates to 9,784 disputes, an 80% increase year-on-year.
The growing financial strain on tenants is unfolding alongside the anticipated Renters’ Rights Bill, which aims to abolish Section 21 ‘no-fault’ evictions. The Bill will also make it harder for landlords to evict tenants via Section 8, requiring tenants to be at least three months in arrears before an eviction can proceed. For tenants who pay weekly or fortnightly, the threshold will rise from eight weeks to 13 weeks.
Combined with economic uncertainty, the policy shift is contributing to a drop in rental property supply. At the end of Q1 2025, just 284,000 rental homes were available across the UK, according to TwentyEA, down 18% from a year earlier and 23% below pre-pandemic levels.
As supply has tightened, rents have continued to climb. Reposit reports that the average monthly rent now stands at £1,095.
“Landlords have been facing sustained cost pressures for some time, and as rents have continued to rise, their exposure to tenant arrears has increased. The average cash deposit now stands at £1,261, which is £976 less than the average arrears value and underscores the inadequacy of traditional deposit schemes, which offer just five weeks of protection,” said Ben Grech, CEO of Reposit.
“Our data also shows that the average charge for damages and cleaning (excluding arrears) reached £1,355 in Q1 2025 - up 18% since last year. With the Renters' Rights Bill requiring landlords to accommodate tenants' requests for pets, concerns over potential property damage are growing. In response, interest in our FCA-regulated product - offering eight weeks of comprehensive protection - has grown among landlords and letting agents.”
Despite the year-on-year surge in arrears, the average amount actually dropped 14% from £2,592 in Q4 2024. Reposit suggests this seasonal dip may reflect added financial strain on tenants in the run-up to Christmas.
