Throughout July to September the average rental arrears claim increased to £2,064 marking a 22% rise from £1,694 from 12 months ago.

In Q3 both tenants and landlords grappled with high interest rates and rising rents The interest rate held steady at 5.25% in July and August before dipping slightly to 5% in September when rents increased by 3% to reach the average of £1,149.

According to UK Finance landlords faced significant challenges with 13,000 BTLL mortgages in arrears of 2.5% or more of the outstanding balance in Q3 this year; this figure was 4% lower than the previous quarter but increased from 11,540 a year earlier.

Despite a year-on-year rise in significant rise in arrears claims, the overall percentage of tenancies ending with outstanding rent has fallen as with the usual seasonal occurrences. The arrears value in Q3 experienced a slight decline compared to the previous quarter.

Additionally, tenants continued to suffer from a shortage of rental stock, the availability of rental properties hit a 15-year low with only 259,000 properties available across the UK in September 2024. This represents a more than a 22% reduction from the 332,000 available in September 2019.

Meanwhile, tenants have also continued to be affected by a lack of rental stock with available properties to rent now at their lowest in 15 years, falling to 259,000 in September 2024 for the whole of the UK, compared with 332,000 in September 2019 — a reduction of more than 22% according to  an agents and consultancy.

An alternative deposit service spokesperson, says: “The amount claimed for each arrears case is now exceeding £2,000, substantially outstripping the value of a five week cash deposit and leaving landlords at risk from an excess cost of around £700 per claim.

“With the incoming Renters’ Rights Bill, landlords are becoming increasingly conscious about protecting themselves in cases of rent arrears, driving more interest towards deposit alternatives.

They’re finding our FCA-regulated product – which provides an extra three weeks cover of eight weeks rent – reassuring against the current backdrop of affordability challenges for tenants, many of whom struggle to save the large lump sum required for a cash deposit.