Rental arrears in the UK have reached record levels, prompting landlords to adopt more stringent tenant checks amid ongoing affordability challenges and new legislative changes. The introduction of the Renters’ Rights Act has notably influenced landlord behaviour, as they seek to mitigate risks in a shifting rental market.

Rising rental arrears and slowing growth

Data from deposit alternative provider Reposit reveals that average rental arrears climbed to £2,281 in the first quarter of 2026. Although this figure represents a 2% increase year-on-year, it indicates a deceleration compared to previous years, when arrears growth was considerably higher. For example, between Q1 2023 and Q1 2024, arrears rose by 27%, followed by a 23% increase from Q1 2024 to Q1 2025.

This slowing growth suggests that while arrears remain elevated, the market may be beginning to stabilise after a period of rapid increases.

Impact of the Renters’ Rights Act on landlord behaviour

The Renters’ Rights Act, which came into force on 1 May 2026, has significantly affected landlord practices. According to Reposit’s CEO, Ben Grech, landlords are becoming increasingly risk-averse and are tightening referencing criteria to prioritise financial security and tenant reliability.

Grech explains: “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.” He highlights that the abolition of Section 21 no-fault evictions has reduced landlords’ flexibility in managing tenancies, further encouraging caution.

He adds, “The average traditional deposit stands at £1,308, which is £973 below the average arrears value, highlighting the limitations of traditional deposit schemes.” This gap underscores the need for alternative solutions that reduce risk and improve affordability for both landlords and tenants.

Affordability pressures persist

Despite some signs of improvement, affordability remains a significant concern. UK Finance data shows that at the end of Q4 2025, there were 9,520 buy-to-let mortgages in arrears exceeding 2.5% of the outstanding balance, a decrease of 910 from the previous quarter. This suggests tentative progress in mortgage arrears, yet the broader financial pressures continue.

Interest rates have remained steady at 3.75%, while inflation averaged around 3.2% in the first quarter of 2026. These factors contribute to ongoing cost pressures for both landlords and tenants, influencing rent payment reliability and overall market dynamics.

What this means for landlords

Landlords now face a more complex rental landscape shaped by legislative changes and economic pressures. The Renters’ Rights Act has curtailed eviction options, compelling landlords to be more diligent in tenant selection to minimise arrears risk. Traditional deposit schemes appear insufficient to cover rising arrears, prompting consideration of alternative financial protections that balance risk reduction with tenant affordability.

Moreover, landlords must navigate a market where tenants are also under financial strain, requiring a careful approach to tenancy management and support. Solutions that allow tenants to retain access to funds for immediate needs, such as moving costs, while providing landlords with adequate security, will be increasingly important in fostering a resilient rental sector.

Source: Based on reporting from Property118

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