UK Finance data shows falling arrears alongside rising landlord claims
The share of UK landlords reporting rental arrears fell to an all-time low of 26% over the past 12 months, according to Landlord Trends research published by Pegasus Insight, capping a six-year decline from a pandemic-era peak of 42% in 2020.
Separate lender data corroborates the trend. UK Finance figures show 8,390 buy-to-let mortgages were in arrears of 2.5% or more of the outstanding balance in the second quarter of 2026, 6% fewer than in the previous quarter, with buy-to-let arrears accounting for just 0.44% of outstanding mortgages during the period. That figure was also 26% lower than the equivalent quarter of 2025, with annual declines recorded across every buy-to-let arrears band, including a 36% reduction in the 7.5%-to-10% band.
Portfolio size remains the key risk marker
The research found landlords with larger portfolios continue to carry disproportionate exposure. Where arrears do occur, they remain concentrated among larger holdings: 66% of landlords with 11 or more properties experienced arrears in the past year, compared with 18% of those holding between one and 10 properties. Voids showed a similar pattern, affecting 41% of landlords overall, with 68% of those holding 11 or more properties reporting a void lasting more than seven days, against 35% of smaller-portfolio landlords. The average void period ran to 66 days.
Tenant-side data lends further support to the improving picture. The research drew on a companion Wave 1 2026 Tenant Trends survey of 3,000 private renters, in which only 12% said they had missed a rental payment in the past year, and roughly nine in 10 described their rent as manageable or comfortable.
Lending activity has also strengthened
Mortgage brokers may find added context in UK Finance's Q1 2026 buy-to-let market update. The data showed 58,272 new buy-to-let loans advanced in the UK, worth £10.8 billion, up 3.26% by number and 7.02% by value against the same quarter a year earlier. Average gross rental yields reached 7.21%, compared with 6.93% a year earlier, while the average interest rate on new buy-to-let loans fell to 4.71%, six basis points lower than the previous quarter. Louisa Sedgwick, managing director of mortgages at Paragon Bank, said activity in the first quarter remained ahead of the same period last year, "indicating that the market continues to move in the right direction where conditions are supportive."
Possession claims complicate the outlook
Not every indicator points in the same direction. Ministry of Justice figures show landlords issued 23,635 possession claims in England and Wales between April and June 2026, 6% more than the 22,352 claims issued in the same quarter of 2025, with accelerated possession claims up 16% to 8,569. Warrants fell 6% to 9,715, and repossessions carried out by county court bailiffs declined 3% to 6,560 over the same period.
Sector voices urge caution despite the improvement
Bethan Cooke, director at Pegasus Insight, said the fall to 26% is encouraging but should not be read as evidence that pressures on landlords and tenants have disappeared, noting that larger portfolio landlords remain far more exposed to arrears while voids continue to affect four in 10 landlords.
Ian Harris, president of NAEA Propertymark, said the reduction in mortgage arrears and repossessions is welcome, but affordability remains a challenge for many across the housing market, and early engagement is key to helping those in financial difficulty.
James Tatch, head of analytics at UK Finance, said mortgages in arrears are falling for both residential and buy-to-let loans, and possessions are down year-on-year for the first time since late 2003, remaining significantly below the long-term historic average.
