Rent arrears: why it happens & how landlord can prevent loss

Rental arrears across the UK run into the millions. Propoly, a tenant compliance and landlord protection platform, found more than 210,100 rented households in England fell into arrears during 2024 and 2025. The result? Landlords were collectively owed £470 million in unpaid rent during a one-year period. 

In Scotland, the SafeDeposits Scotland Charitable Trust found 29% of tenants experienced difficulties paying their monthly rent over the past year. An unsurprising figure, given 4 in 10 tenants had experienced a rent increase in the last year.

Why do tenants fall into rent arrears?

Knowing why tenants pay late - or fail to pay their rent at all - helps landlords develop an understanding and develop risk-management strategies. Common reasons include:

• Cost of living pressures: our income has to work harder than ever, thanks to rising inflation, council tax increases and the soaring price of fuel thanks to geopolitical unrest. Sometimes, the cost of everyday essentials leaves tenants with no money to pay the rent.

• Loss or reduction of income: many companies are restructuring and cutting hours. Some are making redundancies. An increasing number are not hiring thanks to AI.  The job market can be tough and no wage equals no money to pay the rent.

• Relationship breakdown: whether it was a plutonic arrangement, a simple house share or a romantic break up, when one person moves out of a rental, the remaining person may find it hard to cover the entire rent.

• Landlord/tenant tension: although tenants are advised to never withhold rent payments, they may choose to do so if they feel aggrieved. This may occur if the tenant feels they are being treated unfairly, the property is unsafe or if repairs aren’t carried out.

• Unsustainable rent rise: landlords can also experience rising costs and increasing the rent, within permitted restrictions, is a way to keep the let viable. The tenant, however, may struggle to meet the higher rent.

Pre-tenancy advice

Rent in advance 

Taking rent in advance removes the immediate and mid-term risk of rent arrears but there is no blanket legislation across the UK. Landlords in Scotland can ask for up to six month’s rent in advance and in Wales, there is no current cap on advance rent. In England, the Renters’ Rights Act will limit upfront rent in advance payments to one months’ rent. The tenant, however, will still be able to voluntarily offer a lump sum payment after the tenancy has started.

Guarantors

England is moving towards a greater adoption of guarantors, especially with rent in advance curtailed. A guarantor is someone who is legally-bound to cover the tenant’s rent if they can’t pay. The guarantor must also pass referencing for the tenancy to get the green light.

Rent guarantee insurance

Sensible landlords will take out a rent guarantee insurance policy before the tenancy commences. The best policies will cover two major instances: if the tenant stops paying rent but remains in the property and during void periods but each policy differs.

Watertight tenancy agreement

While it is usual to deduct rent arrears from a tenant’s deposit at the end of the tenancy, landlords will want to minimise any chance of a challenge. A tenancy agreement should include a ‘deposit use’ clause that specifies rent arrears as a reason for deductions to remove any grey areas. 

Direct debit or standing order payments

How landlords collect the rent can improve their chances of getting paid. If it’s left to a manual bank transfer, the tenant may forget or fail to make the payment. Standing orders and Direct Debits are automatic for better reliability. A landlord can also suggest the money comes out the day after the tenant is paid, reducing the chance of the payment bouncing.

Strategies during the tenancy

Be approachable

While some arrears are repeat and require eviction, others financial stresses are brief and can be overcome. If a tenant can freely share worries with their landlord, a solution can be found – such as temporarily reduced payments, a rent holiday or a repayment plan – before arrears build. Don’t forget, any arrears solutions should be made in writing, and the proposal signed by both the landlord and tenant. 

Pay attention to notifications

If a standing order or Direct Debit bounces due to insufficient funds in the tenant’s account, banks and building societies automatically send alerts – usually via push notifications from mobile banking apps and/or by email or text. Landlords who repeatedly ignore alerts may miss arrears.

Kept rent payment records

It’s prudent to keep precise records and bank statements relating to rent payments. Evidence of money in – and missed payments - is critical if a tenant ever challenges arrears.  

When the tenancy ends

If there are arrears left at the end of the tenancy, the landlord can deduct these from the deposit taken at the start. The landlord must first communicate to the tenant how much is being deducted and why. If they don’t agree, the landlord can use the approved tenancy deposit scheme’s resolutions service.

Our lettings team is on hand to answer any rent payment and arrears questions you have so get in touch.