Soaring housing costs dampen renter dreams of homeownership

Nearly two-fifths (38%) of UK renters point to the hefty deposit required for a home as a major obstacle to owning property, according to Barclays Property Insights.

Beyond this, tenants say that additional expenses such as stamp duty, legal fees and property surveys significantly inflate the cost of purchasing a home.

Recent buyers report spending an average of £13,530 on these extras, a sharp rise from the £9,337 paid by those who bought more than five years ago.

Only 16% of renters believe homeownership is achievable within the next five years, a decline from 23% the previous month.

Many say they are caught off guard by hidden costs, with 12% unaware of charges like valuation or mortgage broker fees at the outset.

Costs rise for tenants

The head of mortgages at Barclays, Jatin Patel, said: “We experienced a blockbuster month for completions in March, as buyers raced to get ahead of the stamp duty deadline.

“Meanwhile, for existing homeowners and renters the shift in sentiment reflects the cautiousness felt across the economy as a whole, as consumers are concerned about rising bills and the prospect of global tariffs impacting their wallets.”

He adds: “Housing consumes a significant portion of income, particularly for renters.

“With four in 10 adjusting their spending to meet their housing costs, it’s clear that the financial pressures of maintaining a home are intensifying at a time where people face a delicate balance between their essential spending and long-term financial goals.”

Rents rise over the year

In March, Barclays noted a 5.4% year-on-year increase in rent and mortgage expenditure, down from 7.7% in February, following a reduction in the Bank of England’s base rate.

Despite this, escalating household bills continue to strain budgets, eroding confidence among renters aspiring to buy their first home and impacting overall household financial optimism, which fell to 70% from 75%.

Mortgage completions surged by 50% last month, marking the highest volume since September 2021, as buyers rushed to beat the stamp duty threshold changes.

First-time buyers were particularly active, with completions soaring by 70% compared to February.

Renters spend 36% of income

Housing-related expenses, including rent or mortgage payments, council tax and energy bills, now account for 28% of UK income, climbing to 36% for renters.

Nearly three-quarters (73%) report a rise in these costs over the past year, adding an average of £126 monthly or £1,516 annually.

Millennials, aged 28-43, face the steepest increases, with 67% noting an additional £191 per month, or £2,286 yearly.

Utility bills were the largest contributor for 47% of consumers, followed by council tax at 30%.