Rent rises start to ease – but renters still worry

Tenants are experiencing some relief as the rate of rent rises slows down significantly, new data from Barclays reveals.

The bank says that renters spent just 1.8% more on rent last month than in March last year.

It has analysed millions of its customers’ current accounts and found the 1.8% extra being spent on mortgages and rent is in stark contrast to the peak of 12.2% recorded in June 2023.

However, while the overall rise in housing costs is easing, some consumers are still feeling the strain.

One in six (16%) – including tenants – are unsure about meeting their housing payments, and 18% of renters and homeowners are adjusting their spending habits to cope.

‘Spending is still reeling from last year’s spike in housing costs’

The bank’s head of savings and mortgages, Mark Arnold, said: “Non-essential spending is still reeling from last year’s spike in housing costs, which caused both homeowners and renters to cut back while looking for additional sources of income – such as delaying renovations and renting out spare rooms.

“However, there are reasons to be optimistic – our data shows that housing costs are stabilising, the inflationary tide is easing, and interest rates are predicted to fall over the coming months, all of which should translate into increased consumer confidence and spending.”

The report also highlights that the rental market continues to be a challenge with more than a fifth (22%) of renters saying there’s too much competition for rental properties.

The tenants also say that the level of competition means there is less value for their money.

Homeowners have started renting out a room

To help meet their bills, 3% of homeowners have started renting out a room in their home in the past 12 months.

This figure rises to 12% for homeowners in London.

And the impact on non-essential spending has seen households cutting back on items like DIY and electronics, which dropped by 5.2% in March.

Also, 16% of people have postponed home renovations due to financial pressures.

However, consumer confidence in general household finances remained steady last month at 67%.

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