"The fall in the value of arrears and in their frequency is encouraging, but it doesn’t tell the full story."
- Ben Grech - Reposit
This is the first time in the past five years that arrears have declined over three consecutive quarters.
Average arrears were £1,824 in Q3 2025, 13% lower than in Q2 and 23% lower than in Q1. Cases of arrears are also occurring less frequently, down 29% compared with Q2.
The decline in arrears may reflect a slowdown in rental growth. While rents continue to rise, the rate of increase has eased slightly. Latest figures from the ONS show average UK monthly private rents grew 5.5% to £1,354 in the 12 months to September 2025, compared with 5.7% in the year to August.
Data from one mortgage firm for Q3 2025 indicates that the buy-to-let arrears rate increased marginally by 0.1%, while Direct Debit Rejections (DDRs), a measure of missed payments, fell 7.9%.
Average claims values also dropped for the third consecutive quarter, reaching £983. The number of claims has risen since Q2 but aligns with typical Q3 levels in previous years.
Landlords and tenants continue to navigate a challenging environment, with the Bank of England base rate at 4% and inflation at 4.1%. Upcoming changes under the Renters’ Rights Bill will also affect arrears management. Among other measures, the Bill raises the threshold for landlords to issue a Section 8 notice, making repossessions more complex.
Under the Bill, tenants must now be at least three months in arrears, or 13 weeks for weekly or fortnightly payments, before a landlord can issue a Section 8 notice, compared with two months or eight weeks previously.
Ben Grech, CEO of Reposit, said, “The fall in the value of arrears and in their frequency is encouraging, but it doesn’t tell the full story. Many landlords remain exposed because traditional deposits are still insufficient to cover average arrears, which now exceed £1,800 compared with typical cash deposits of £1,380."
“As legislation changes, landlords are looking for more reliable ways to protect their income. Solutions such as Reposit that provide extended cover and compliance support are increasingly important, particularly as interest rates and inflation continue to put pressure on both tenants and property owners."
“The combination of slowing rent growth, high borrowing costs, and new legal thresholds for repossession is creating a more cautious rental market. For landlords, this means assessing risk carefully and considering enhanced protection measures, while tenants may face stricter referencing and affordability checks to ensure tenancies remain sustainable.”
