Data released from Reposit, the FCA-regulated deposit alternative, reveals a concerning surge in rent arrears during the final quarter of last year as the economic climate took its toll on tenants.

The data reveals a significant uptick in the value of rent arrears claims, soaring from October’s £1,344 to  £2,108 in November, and maintaining high levels at £1,954 in December. Concurrently, the percentage of tenancies concluding with arrears rose from 13.7% in September and October to 15.8% in the subsequent two months.

Rent arrears claims were also 50% higher in December 2023 when compared to 2022, despite there being just a 4% increase in rental price between the same time period.

This spike in rent arrears corresponds with broader economic trends, including increases observed in defaults on mortgages and credit cards during the same period. Evidently, the escalating cost of living is taking a toll on tenants, impacting their ability to meet financial obligations.

According to Rightmove’s trend tracker, tenant affordability is now at a critical juncture, with 23% of rental properties experiencing a reduction in advertised rent. This underscores the financial strain faced by tenants and the urgency for viable solutions.

Commenting on the findings, Reposit CEO Ben Grech remarked, “The increase in rent arrears is obviously reflective of tough times for tenants, but this naturally has a knock-on effect for landlords, who are facing their own challenges with Renters Reform and higher mortgage rates. It’s clear that tenants need a better option to relieve their cashflow burden, while landlords need greater cover in the event of arrears – we already know that a 5-week cash deposit is insufficient in 14% of cases.”

Grech continued, “Furthermore, it naturally increases the strain on letting agents. With increased arrears comes increased paperwork, disputes, and delays.”

Reposit is committed to addressing these challenges head-on and aims to provide a robust solution that not only supports tenants in managing their cashflow but also offers landlords the protection they need in the face of rising arrears.

Reposit’s insurance-backed product structure means that landlords are guaranteed payment and receive up to eight weeks’ worth of cover against rent arrears and dilapidations. Reposit is independently authorised and regulated by the FCA.