UK Housing Costs Rise 41% in Five Years for Renters and Homeowners
A new study shows that housing costs in the UK have increased sharply over the past five years. Both renters and homeowners are now paying much more to keep a place to live. Rising mortgage interest rates have been one of the main reasons for this increase.
According to research by Savills, UK households spent a record £226 billion on housing last year. This includes mortgage payments, rent, and other housing-related costs. The study shows that the total amount spent on housing has increased by £66 billion over the last five years. This means housing costs have risen by 41% during that time.
Homeowners with mortgages have been among the hardest hit. Many borrowers had fixed-rate mortgage deals that protected them from higher interest rates for a certain period. However, when these deals ended, many homeowners had to switch to new loans with much higher interest rates. As a result, their monthly payments increased significantly.
Although housing costs are still rising, the pace of increase has slowed slightly. Last year, housing spending rose by about £8 billion, which is an increase of 3.6%. This is lower than the increase seen in previous years. For example, spending rose by £22 billion in 2023 and £19 billion in 2024.
Even though the overall increase slowed, the cost of mortgage interest payments rose sharply. Savills reported that the amount paid in mortgage interest increased by 9% last year, reaching £53.6 billion. This increase in interest payments accounted for more than half of the overall rise in housing costs.
Experts say this trend could continue in the coming years. Economic tensions around the world may push inflation higher, which could affect interest rates and housing costs.
Recently, military strikes by the United States and Israel on Iran have raised concerns about global economic instability. If these tensions continue, they could cause higher inflation. In turn, this may lead to higher mortgage rates and increased housing costs for many households.
According to Lucian Cook, the housing market could continue to feel the effects of higher interest rates for a long time. He explained that many homeowners now choose mortgage deals that last for longer periods. While this can offer stability, it also means that the effects of higher interest rates stay in the economy for a longer time.
Cook said that earlier forecasts suggested that 2026 might bring some relief for homeowners. Lower interest rates or stable inflation could have helped reduce housing costs. However, the current economic situation has made that outlook less certain.
Mortgage markets often react quickly to inflation risks. If lenders believe inflation will rise, they usually increase mortgage rates. This can make borrowing more expensive for homeowners and people trying to buy a property.
Recent data shows that mortgage rates are already increasing. Last week, the average interest rate for a two-year fixed mortgage rose above 5%. At the end of February, the rate was about 4.84%, meaning borrowing costs have increased in a short time.
Many lenders have also started removing some mortgage deals from the market or increasing their rates. This has made it harder for buyers and homeowners to find affordable mortgage options.
When mortgage interest and regular repayments are combined, the total cost for mortgage holders is very high. Savills estimates that 8.8 million mortgage holders in the UK paid a combined £114 billion in housing costs in 2025. On average, this means each borrower is paying around £13,000 per year.
While mortgage holders have faced large increases, renters have also seen their housing costs rise. However, the increase in rental costs has been slower compared with mortgage payments.
Savills found that the total cost of renting rose by about 2.75%, reaching £112 billion in 2025. A large portion of this money goes to private landlords.
Out of the £226 billion spent on housing overall, about £81 billion was paid to private landlords. This means that the average private renter pays about £15,000 per year in rent.
Over the past five years, the total amount paid by private renters has increased by 27%. Although this rise is lower than the increase seen in mortgage costs, it still shows that renting has become more expensive for many people.
Housing costs have also increased at different rates across the UK. Some regions have seen much bigger increases than others.
For example, London recorded the smallest percentage increase in housing costs during the last five years. Costs in the capital rose by 36%, which is lower than several other regions.
In comparison, housing costs increased by 49% in north-west England and by 45% in both north-east England and eastern England. These regions experienced faster growth in housing costs, partly because house prices and mortgage borrowing have grown quickly there.
Even though the increase was smaller in London, the city still represents the largest share of housing costs in the country. About 23.4% of all housing spending in Britain takes place in London, reflecting the capital’s large population and high property prices.
Data from the property website Rightmove also provides insight into the housing market. The site reports that asking prices for homes increased slightly in March.
According to Rightmove, the average asking price for homes listed for sale rose by £3,023, reaching £371,042. This represents a typical seasonal increase of 0.8%, which often happens in the spring when the housing market becomes more active.
However, price growth remains limited because there are many homes available for sale. Rightmove said the number of homes on the market is currently at its highest level for this time of year in 11 years. When there are more properties available, buyers have more choices, which can prevent prices from rising too quickly.
Despite the uncertain global situation, the housing market in the UK remains relatively stable. Rightmove described the market as “steady”, even though geopolitical tensions and economic concerns continue to affect financial markets.
The number of property sales is slightly lower than last year, but the difference is small. Sales are currently about 2% below the strong market seen last year. However, they are still 5% higher than in 2024, showing that demand for housing remains fairly strong.
Overall, the study highlights how much housing costs have increased in recent years. Rising interest rates, inflation, and economic uncertainty have all played a role in pushing up costs for both homeowners and renters.
For many households, housing now takes up a large share of their income. Experts warn that if interest rates remain high or inflation increases again, housing costs could continue to rise in the future.
As a result, millions of people across the UK may continue to face financial pressure as they try to manage the cost of owning or renting a home.
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