Landlord average arrears rise above £2,500

Landlords face growing financial risk as the average rent debt has jumped to £2,597, a 44% surge in a year, research reveals.

Reposit, a deposit alternative provider, has found that with a typical cash deposit of £1,228, there’s a potential arrears bill deficit of £1,369 – the highest recorded.

While arrears have risen, the proportion of tenancies with outstanding balances dipped slightly.

Landlords also struggled with the pressure of high interest rates of 5% in October, which fell by 0.25% to 4.75% in November.

The quarter also includes the impact of Chancellor Rachel Reeves’ Budget in October.

‘Average arrears now surpassing £2,500’

The firm’s chief executive, Ben Grech, said: “With average arrears now surpassing £2,500, the shortcomings of cash deposit schemes have become increasingly evident.

“This is concerning for landlords, especially with the upcoming Renters’ Rights Bill, which will abolish Section 21 evictions and eliminate a key layer of protection.

“Once enacted, the Bill will stipulate that 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.”

He added: “Our data separately shows that the average charge, including those for damage and cleaning – excluding arrears – reached £1,409 in Q4 2024.

“With the Bill requiring landlords to consider tenants’ requests to keep pets, the prospect of significant damage costs adds to their concerns.”

Buy to let mortgages with arrears

UK Finance recently reported that there are 12,610 buy to let mortgages with arrears of 2.5% or more, a 3% drop from the previous quarter.

Reposit’s data indicates average rents dipped slightly to £1,081 during Q4 2024.

Despite this, Parliament figures highlight the ongoing cost of living pressures, with 53% of adults experiencing higher outgoings in October.

Job numbers have also declined, with 47,000 fewer payroll employees in the year to December – it’s now 30.3 million, which is the biggest drop since November 2020.