The value of rent arrears has fallen for the third consecutive quarter of 2025, new research has revealed.

This is the first time in the last five years worth of data that arrears values have fallen over three consecutive quarters.

Average arrears values were recorded at £1,824 in Q3 25 which is 13% lower than in Q2 25 and 23% lower than Q1 25. Arrears are also happening less frequently with cases down 29% compared with Q2.

This decline in arrears may be linked to a slowdown in rental growth. While rents continue to rise, the rate of increase has eased slightly. According to the latest ONS figures, average UK monthly private rents grew 5.5% to £1,354 in the 12 months to September 2025, down from 5.7% in the year to August.

Meanwhile, wider market data from one mortgage firm for Q3 25 showed the BTL arrears rate increased very slightly by 0.1%, while Direct Debit Rejections (DDRs), a form of missed payment, fell 7.9%.

Average claims values have also fallen for the third consecutive quarter and are now at an average of £983. The number of cases has risen since Q2 but is in line with previous Q3 periods.

Landlords and tenants continue to navigate a challenging environment, with the Bank of England base rate at 4% and inflation at 4.1%, alongside upcoming legislative changes under the Renters’ Rights Bill. Among other measures, the Bill increases the arrears threshold required for landlords to issue a Section 8 notice, making repossessions more complex.

The Bill stipulates that tenants must be at least three months in arrears (previously two months) or 13 weeks for tenants paying weekly or fortnightly (previously eight weeks) before a landlord can effectively use a Section 8 notice to evict.

Ben Grech, CEO of Reposit, which carried out the research, said: “The fall in the value of arrears and in their frequency is encouraging but it doesn’t tell the full story. Many landlords remain exposed because traditional deposits are still insufficient to cover average arrears, which now exceed £1,800 compared with typical cash deposits of £1,380.

“As legislation changes, landlords are looking for more reliable ways to protect their income. Solutions such as Reposit that provide extended cover and compliance support are increasingly important, particularly as interest rates and inflation continue to put pressure on both tenants and property owners.

“The combination of slowing rent growth, high borrowing costs, and new legal thresholds for repossession is creating a more cautious rental market. For landlords, this means assessing risk carefully and considering enhanced protection measures, while tenants may face stricter referencing and affordability checks to ensure tenancies remain sustainable.”