Open Banking for Landlords: How VRP Is Modernising UK Rent Collection in 2026
351 million UK open banking payments in 2025. Variable Recurring Payments could cut rent collection costs by 80%. Here's how the PropTech-fintech convergence is transforming how landlords get paid.
The Latch Team
Editorial
351 million open banking payments were processed in the UK in 2025, a 57% year-on-year increase. 15.16 million consumers and businesses now use open banking. Yet most landlords still collect rent via standing orders — a technology that has not fundamentally changed since the 1960s.
Variable Recurring Payments (VRP) are the next evolution: bank-to-bank payments that tenants control, landlords receive instantly, and that cost a fraction of card payments or Direct Debit. VRP transactions have grown 393% in two years, and the commercial rollout is accelerating through 2026.
This article explains what VRP means for landlords, why it matters now, and how the PropTech-fintech convergence is creating a fundamentally better way to collect rent.
What Is Open Banking VRP?
Open banking connects bank accounts directly through secure APIs regulated by the Financial Conduct Authority. Instead of routing payments through card networks (Visa, Mastercard) or the Direct Debit system (Bacs), open banking moves money bank-to-bank. Variable Recurring Payments (VRP) extend this to scheduled payments that tenants authorise once, with the flexibility to adjust amounts — perfect for rent that changes periodically.
Tenant Control
Unlike Direct Debit, tenants retain control over VRP. They authorise a payment mandate with maximum limits, and can see exactly what will be debited and when. This transparency reduces disputes and builds trust.
Variable Amounts
Standing orders are fixed amounts. VRP allows the payment amount to vary within pre-agreed limits — ideal for rent adjustments, utility top-ups, or split payments without needing to cancel and recreate instructions.
Instant Settlement
Open banking payments settle in seconds via Faster Payments, compared to 3 working days for Direct Debit. Landlords see rent in their account on the day it is due, not days later.
Lower Costs
Open banking payments typically cost 0.1-0.5% per transaction, compared to 1-3% for card payments and £0.10-0.50 per Direct Debit. For a landlord collecting £15,000/month in rent, the savings are substantial.
VRP transactions have grown 393% over the last 2 years, making it one of the fastest-growing payment methods in the UK. The commercial VRP framework launched in mid-2025.
For an overview of open banking payment options available today, see our guide on open banking rent collection for UK landlords.
Why Now: The 2026 Inflection Point
Open banking reached a critical mass in 2025. The commercial VRP pilot launched in mid-2025, building on the success of sweeping VRP (account-to-account transfers at the same bank). FCA regulation provides consumer protection equivalent to Direct Debit, removing the trust barrier. The infrastructure is now in place for mass adoption.
| Year | UK Open Banking Users | Total Payments | VRP Availability |
|---|---|---|---|
| 2023 | 7 million | ~150 million | Sweeping VRP only (same-bank) |
| 2024 | 11 million | ~220 million | Sweeping VRP + pilot commercial VRP |
| 2025 | 15.16 million | 351 million | Commercial VRP framework launched |
| 2026 (projected) | 20-27.5 million | 500+ million | Full commercial VRP rollout |
PropTech funding hit £16.7 billion in 2025, with payment infrastructure receiving the largest slice of investment. The convergence of property management platforms and financial technology is creating integrated solutions where rent collection, accounting, and tenant management operate from a single interface.
For an overview of property technology options, see our guide on PropTech tools for UK landlords in 2026.
The Financial Case for Landlords
| Payment Method | Transaction Cost | Settlement Time | Setup Complexity | Tenant Control |
|---|---|---|---|---|
| Bank transfer (manual) | Free | Same day | None (but unreliable) | Full tenant control |
| Standing order | Free | Same day | Tenant sets up | Tenant-controlled (can cancel) |
| Direct Debit | £0.10-0.50 per transaction | 3 working days | Landlord applies for originator status | Landlord-controlled (indemnity risk) |
| Card payment | 1.5-3% per transaction | 2-5 working days | Payment gateway required | Tenant-initiated |
| Open Banking VRP | 0.1-0.5% per transaction | Instant (seconds) | Integration with platform | Tenant-authorised, landlord-initiated |
Real Savings Example
A landlord with 10 properties at £1,200/month average rent collects £144,000 per year. Switching from card payments (2.5% fees = £3,600/year) to open banking VRP (0.3% fees = £432/year) saves £3,168 annually. Even compared to Direct Debit at £0.20/transaction, VRP saves through instant settlement and lower dispute costs.
10-property portfolio saves £1,200-3,000+ per year with VRP vs traditional methods
The secondary benefits are equally important: same-day cash flow visibility improves financial planning, automated reconciliation eliminates manual matching of payments to tenants, and instant confirmation removes the uncertainty of waiting for standing orders to clear.
How PropTech and FinTech Are Converging
The future of rent collection is not a standalone payment tool — it is embedded finance within property management platforms. The convergence means landlords manage rent, maintenance, accounting, and compliance from one dashboard, with payments flowing seamlessly through open banking rails.
- Embedded payments: Rent collection built directly into property management software, eliminating the need for separate payment processors or bank reconciliation
- Automated reconciliation: Open banking APIs match incoming payments to tenant records automatically, flagging discrepancies and partial payments in real time
- Real-time cash flow visibility: Bank feeds and instant payment confirmation give landlords an up-to-the-minute view of their financial position across all properties
- Tenant self-service portals: Tenants initiate and manage their own payments through secure portals, reducing landlord admin and improving payment reliability
- Open Banking-powered tenant referencing: With tenant consent, bank transaction data provides a real-time view of affordability and payment behaviour — more accurate than traditional credit checks
The UK PropTech market is valued at £3.32 billion in 2024 and is forecast to reach £25.08 billion by 2035. Payment infrastructure is the fastest-growing segment.
For current automated collection options, see our guide on automated rent collection in the UK.
What Landlords Need to Know
Current Options Available Today
Single open banking payments are already available through most property management platforms. Tenants can pay rent via their banking app with a single confirmation. These payments settle instantly and cost significantly less than card payments. For landlords currently using card or Direct Debit, switching to open banking single payments is the immediate opportunity.
When Full VRP Arrives
Commercial VRP is being rolled out through 2026. The full framework allows recurring payments with variable amounts — meaning rent can be collected automatically each month, with the flexibility to adjust for rent increases, utility charges, or partial payments without tenant re-authorisation. Banks are being onboarded in phases, with major high-street banks expected to support commercial VRP by late 2026.
How to Prepare Now
- Switch to a platform-based rent collection system rather than relying on standing orders or manual transfers
- Choose property management software that supports open banking payments (or has committed to VRP integration)
- Digitise your tenant payment records — automated reconciliation requires clean, digital data
- Set up automated rent reminders and payment tracking to reduce your current manual workload
- Review your current payment processing costs and calculate potential savings from open banking
Future-Proof Your Rent Collection
Latch is built for modern payment methods. Collect rent online today and be ready for VRP as it rolls out — all from the same platform you use for compliance, communication, and reporting. Start free.
Ready to simplify your property management?
Create your free account today and see how organized financial tracking can streamline your portfolio.
Get Started with LatchFor step-by-step guidance on moving to online collection, see our guides on how to collect rent online and the best rent collection apps for 2026.
Frequently Asked Questions
Is open banking safe for tenants?
Yes. Open banking is regulated by the Financial Conduct Authority and uses bank-grade encryption. Tenants authenticate payments through their own banking app using their existing security (fingerprint, PIN, face ID). No banking credentials are shared with the landlord or any third party.
What if my tenants don't want to use open banking?
Adoption is growing rapidly — 15.16 million UK users in 2025. Most tenants find open banking easier than setting up a standing order. However, you should offer alternative payment methods during the transition. Open banking works alongside existing payment options.
How much cheaper is open banking than Direct Debit?
Open banking typically costs 0.1-0.5% per transaction versus £0.10-0.50 flat fee for Direct Debit. For a £1,200 rent payment, open banking costs £1.20-6.00 versus Direct Debit at £0.10-0.50. Direct Debit may be cheaper per transaction, but open banking offers instant settlement, lower dispute costs, and no setup fees.
When can I actually use VRP for rent collection?
Commercial VRP is rolling out through 2026. Single open banking payments are available now. The timeline for full VRP availability depends on your bank and your property management platform. Expect widespread availability by late 2026 to early 2027.
What about failed or missed payments?
Open banking payments fail immediately rather than bouncing days later like Direct Debit. This means faster notification and earlier intervention. Your property management software can trigger automated reminders the same day a payment fails.
Is open banking regulated like Direct Debit?
Open banking is regulated by the FCA, which provides strong consumer protection. VRP includes consent management (tenants can see and control mandates) and dispute resolution. While the specific protections differ from the Direct Debit Guarantee, they are robust and designed for recurring payments.
Will Latch support VRP?
Latch is committed to supporting the latest payment technologies for UK landlords. Open banking single payments are part of our payment roadmap, with VRP integration planned as commercial VRP becomes widely available through 2026.
The Future of Rent Collection
Open banking and VRP represent the most significant improvement to rent collection since Direct Debit. Instant settlement, lower costs, better tenant experience, and automated reconciliation address every pain point landlords face with current payment methods. While full VRP is still rolling out, the direction is clear — and landlords who prepare now by switching to platform-based rent collection will be positioned to benefit immediately when VRP becomes available.
Best for: Tech-forward landlords who want to reduce payment processing costs, improve cash flow visibility, and modernise their rent collection infrastructure.
Disclaimer: This article provides general information about open banking and Variable Recurring Payments for educational purposes. Payment technologies, costs, and availability are subject to change. Open banking services are regulated by the Financial Conduct Authority. This article does not constitute financial advice.
