Landlord rent arrears have fallen to their lowest level on record. Just 26 per cent of landlords faced unpaid rent over the past 12 months, according to the latest Landlord Trends research from Pegasus Insight, well below the 42 per cent peak recorded in 2020.
For investors, the headline is welcome but the detail matters more. Smaller landlords are faring far better than those running sizeable portfolios, and void periods continue to eat into income across the sector.
A steady recovery since the pandemic
Pegasus Insight says the arrears figure has improved fairly consistently quarter by quarter since the pandemic, marking a six-year decline in the proportion of landlords affected.
The trend has not been perfectly smooth. The research firm notes a slight uptick in the first quarter of 2026 before the latest reading set a new low.
Its separate Wave 1 2026 Tenant Trends study, drawn from 3,000 interviews with private renters, points in the same direction. Only 12 per cent of tenants said they had missed a rent payment in the last year, and around nine in 10 described their rent as manageable or comfortable.
Why landlord rent arrears hit big portfolios hardest
Scale changes the picture sharply. Two-thirds (66 per cent) of landlords with 11 or more properties experienced arrears in the past year, against just 18 per cent of those owning between one and 10 homes.
Part of that gap is simple arithmetic: the more tenancies a landlord holds, the greater the odds that at least one goes into arrears in a given year. It also means those running sizeable portfolios carry a heavier credit control burden than the sector-wide figure suggests, a point worth weighing alongside the wider shift in the private rented sector.
For portfolio investors, that makes tenant referencing, rent collection systems and arrears cover more than an afterthought. Anyone who assumes rental income arrives without effort may want to revisit the reality of buy-to-let as an active business.
Voids remain the bigger drag on returns
If arrears are easing, empty periods are not. The research found that 41 per cent of landlords had a void lasting more than seven days in the past 12 months, with each void running for 66 days on average.
That is more than two months of lost rent per empty property, while mortgage payments, council tax and utilities continue to fall on the landlord.
Once again, larger landlords are most exposed, alongside HMO operators. Some 68 per cent of those with 11 or more properties were affected, compared with 35 per cent of landlords with smaller portfolios.
Bethan Cooke, director at Pegasus Insight, cautioned against reading too much into the arrears improvement. “Rental arrears falling to 26 per cent is encouraging, particularly after the financial pressures experienced by tenants and landlords over recent years. But it is important not to interpret this as evidence that those pressures have disappeared,” she said.
“Larger portfolio landlords remain much more exposed to arrears, while voids continue to affect four in ten landlords.”
She added: “Our tenant research also shows that most renters are continuing to meet their housing costs, but many household budgets remain stretched. With inflationary pressures persisting and landlords facing higher operating and regulatory costs, the position remains finely balanced. The priority now should be to avoid adding further pressures that could ultimately feed through into rents or reduce the supply of homes available to tenants.”
What this means for investors
The data offers some reassurance that tenant affordability is holding up, which supports rental income across most portfolios. Yet with household budgets stretched and landlords absorbing rising compliance obligations, including those introduced under the Renters’ Rights Act, the margin for error is thin.
Investors with larger or HMO-heavy portfolios should stress-test their cash flow against both arrears and voids of two months or more, and treat continuous tenancy management, including ongoing property inspections and record-keeping, as core to protecting yield. A record low in arrears is good news, but the next leg of returns will depend on keeping properties let.
