Rent arrears soar leaving landlords struggling with shortfalls

Rent arrears have surged by a staggering 30% year-on-year, according to new data

Deposit alternative provider Reposit reveals the average claim for rent arrears hit £2,092 in the second quarter of 2024. This marks a 15% rise from £1,816 in Q1 2024 and a 31% increase from £1,594 in the same period last year.

UK Finance reports that by the end of Q2 2024, there were 13,570 buy-to-let mortgages in arrears of 2.5% or more, and 710 buy-to-let properties were repossessed—a 13% increase from the previous quarter.

Leaving landlords with an average shortfall of £800

Reposit found that although the average amount claimed for tenant arrears increased, the percentage of tenancies ending with outstanding rent dropped by around 3% compared to Q1

Ben Grech, chief executive of Reposit says that despite this figure reducing, landlords remained at significant risk of not receiving enough cover from a five-week cash deposit in the event of arrears.

He said: “While we’re seeing the number of arrears cases reduce slightly, the amount claimed is now averaging over £2,000 – way above the value of a five-week cash deposit of £1,293 – leaving landlords with an average shortfall of around £800.

“We know cash deposits are not enough in 17% of tenancies to cover costs such as rent arrears or damage and this stark inefficiency of the cash schemes is one reason demand has increased for our FCA-regulated product, with sales up by 28% in the first six months of this year compared to last.”

Financial difficulties for tenants and landlords

Mr Grech adds these figures reflect the ongoing financial difficulties both tenants and landlords continue to face such as high interest rates and increasing rents.

During the second quarter of 2022, interest rates stayed high at 5.25%, while rents increased by 2%, reaching an average of £1,133, according to Reposit data.