Average rental arrears reached a new high of £2,281 in the first quarter of the year, data from Reposit has shown. 

However, with arrears increasing by just 2% year-on-year, the latest data indicates that the rate of growth has slowed, suggesting a gradual stabilisation in the market.

This marks a clear shift from the sharp rises seen in previous years when arrears surged by 27% between Q1 2023 and Q1 2024, followed by a further 23% increase between Q1 2024 and Q1 2025.

The deposit alternative service suggests that this picture is consistent with UK Finance data showing that at the end of Q4 2025, there were 9,520 buy-to-let mortgages in arrears of more than 2.5% of the outstanding balance. 

This was in turn, down by 910 compared with the previous quarter, highlighting some early signs of improvement. 

However, landlords and tenants continue to face affordability challenges, with interest rates remaining elevated at 3.75% and inflation averaging around 3.2% throughout Q1. 

Ben Grech, chief executive of Reposit, says: “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.”

The average traditional deposit now stands at £1,308 which is £973 below the average arrears value 

Grech claims that in this environment solutions that reduce risk, improve affordability and provide greater protection for landlords will play a key role in supporting a more balanced and resilient rental market.

“At the same time, they enable renters to retain access to their money and use it for immediate needs, such as moving costs, or to invest for a return, rather than locking the money away for several years.”