Average rent arrears continue to climb and hit £2,237 in Q1 2025 – a 23% increase from £1,818 a year earlier.

That’s according to new data from deposit alternative provider Reposit.

This marks a 56% rise since Q1 2023.

Separate figures based on data taken from the deposit scheme TDS and analysed by FCC Paragon, revealed one in five lettings disputes were caused by rent arrears last year. Around 9,784 disputes involved arrears – an 80% annual rise and accounting for a fifth of all disputes.

Reposit says these financial issues – along with further challenges presented by the Renters Rights Bill – are forcing more landlords to quit.

Data shows the supply of rental homes fell to a record low of just 284,000 across the UK at the end of Q1 2025 – down 18% from Q1 2024 and 23% below pre-pandemic levels in 2019.

In turn, this is pushing average monthly rents higher, now reaching an average of £1,095 pcm. 

Ben Grech, chief executive of Reposit, says: “Landlords have been facing sustained cost pressures for some time and as rents have continued to rise, their exposure to tenant arrears has increased. 

“The average cash deposit now stands at £1,261 which is £976 less than the average arrears value and underscores the inadequacy of traditional deposit schemes which offer just five weeks of protection. 

“Our data also shows that the average charge for damages and cleaning (excluding arrears) reached £1,355 in Q1 2025 – up 18% since last year. With the Renters’ Rights Bill requiring landlords to accommodate tenants’ requests for pets, concerns over potential property damage are growing.”

Although arrears charges have risen sharply year-on-year, they fell by 14% from £2,592 in Q4 24. 

This decline is partly driven by seasonal factors, which likely include heightened financial pressures on tenants’ budgets in the lead-up to Christmas.