LATEST: Tenant rent arrears drop by 20% during 2025

Rent arrears fell by 12% to £1,861 in Q2 2025 marking the first year-on-year decline in a second quarter since 2021.

Deposit alternative firm Reposit reports that this also represents a 20% drop from Q1, when arrears averaged £2,237, which could reflect a slowdown in rental price growth.

According to the latest ONS figures, average UK monthly private rents increased by 7% to £1,339 in the 12 months to May, down from 7.4% in April and below the 9% annual increases recorded at the end of 2024.

UK Finance figures for Q2 show the number of buy-to-let arrears dropped 5% to 11,270, with 4,100 of these in the lightest arrears band, a 6% fall from Q1. However, landlords and tenants continue to face financial challenges due to high interest rates alongside the looming Renters’ Rights Bill.

Three months

Once the legislation is enacted, tenants must be at least three months in arrears (currently two months) or 13 weeks for tenants paying weekly or fortnightly (currently eight weeks) before a landlord can effectively use a Section 8 notice to evict.

Ben Grech, CEO of Reposit, believes the drop in the value of rent arrears is a welcome sign that some financial pressures on landlords and tenants may be easing very slightly. However, the average cash deposit now stands at £1,316 which is £545 less than the average arrears value.

“Amid high interest rates, ongoing inflation, and significant legislative changes on the horizon, landlords are navigating an increasingly unpredictable landscape,” he adds.

“The Renters’ Rights Bill could fundamentally reshape how arrears are managed and how repossessions are handled. We’re seeing a clear shift toward Reposit as landlords seek added protection and letting agents look to reduce compliance risks ahead of the reforms.”