Landlords tighten checks as arrears rise

Rental arrears have hit record levels as landlords become more cautious following the introduction of the Renters’ Rights Act.

Data from deposit alternative provider Reposit shows average rental arrears reached £2,281 in the first quarter of the year.

However, despite rising 2% year-on-year, the figures suggest the pace of growth is beginning to slow.

Landlords are increasingly risk-averse

The Renters’ Rights Act came into force on 1 May, with Reposit reporting that landlords are tightening their referencing criteria.

Ben Grech, CEO of Reposit, 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.”

He added: “The average traditional deposit stands at £1,308, which is £973 below the average arrears value, highlighting the limitations of traditional deposit schemes. 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 allow renters to retain access to their money for immediate needs such as moving costs, or to invest it for a return, rather than locking it away for several years.”

Affordability pressures remain

Reposit pointed to a slowdown in arrears growth compared with previous years, when increases reached 27% between Q1 2023 and Q1 2024, followed by 23% between Q1 2024 and Q1 2025.

UK Finance data shows 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, down by 910 from the previous quarter, suggesting tentative signs of improvement.

However, affordability pressures remain, with interest rates holding at 3.75% and inflation averaging around 3.2% in Q1.