New data shows the average unpaid rent owed by tenants in the private rented sector (PRS) has soared to £2,237 in Q1 2025, up 23% year-on-year and 56% higher than Q1 2023. The figures, released by deposit alternative provider Reposit, reflect the worsening impact of inflation and high interest rates on both renters and landlords.

With 66% of UK adults reporting rising living costs in March 2025, landlords are facing mounting arrears alongside limited protection—average cash deposits of £1,261 fall nearly £1,000 short of average arrears.

Damage and cleaning costs, excluding arrears, have also climbed, averaging £1,355, an 18% increase since last year. Reposit warns that the upcoming Renters’ Rights Bill, which will ban Section 21 evictions and extend the rent arrears threshold for Section 8 notices, could further limit landlords’ ability to recover properties.

Lettings dispute cases related to arrears surged 80% year-on-year, reaching nearly 10,000 in 2024, according to data from FCC Paragon and TDS.

As landlord liabilities rise, many may be forced to scale back portfolios or exit the market, exacerbating rental supply issues across the UK.