UK housing costs rise 41% over five years for renters and owners, study shows | Property
UK households spent a record £226bn to keep a roof over their heads last year, according to figures released on Monday; Borrowers who took out mortgage loans were especially hit hard by the increased payments.
Property group Savills said overall housing costs had risen by 41% to £66bn in the past five years.
The rate of increase has slowed, rising by around £8bn last year, or 3.6%, compared to £22bn in 2023 and £19bn in 2024.
But Savills found there was a particularly large increase in the amounts paid on mortgage interest, which rose 9 per cent last year to £53.6bn, accounting for more than half the overall rise.
The real estate firm warned that this trend could continue if the economic turmoil caused by US and Israeli attacks on Iran triggers persistent inflation.
“In a market where homeowners are locking in mortgages for longer periods of time, the impact of higher interest rates on housing costs and the ability of households to spend elsewhere in the economy tends to have a much longer tail,” said Lucian Cook, head of housing research at Savills.
“Until recently it looked like 2026 would offer some relief, but this is now less certain given the possibility of another wave of inflation, which mortgage markets often price in quickly.”
Last week, the average price of a two-year fixed-rate mortgage jumped over 5% from 4.84% at the end of February, and lenders were busy making deals and raising rates.
Savills said the bill for 8.8 million mortgage holders, including regular capital repayments, would reach £114bn in 2025, meaning the average borrower would pay £13,000 a year.
In the rental market, costs were seen to increase more slowly, reaching 112 billion pounds with an increase of 2.75% in 2025.
Of the £226bn total, £81bn was paid to private sector landlords; On average £15,000, private tenants’ bills have risen by 27 per cent in the last five years.
London recorded the smallest percentage increase in total housing costs over this period, at 36%; the figure was 49% in the north-west and 45% in both north-east and eastern England.
But London still accounts for by far the largest share of Britain’s housing costs, at 23.4% of the total.
According to property website Rightmove, new seller prices rose by an average of £3,023 in March to £371,042; this is a “typical” seasonal increase of 0.8%. The number of homes for sale remains at an 11-year high at this time of year, limiting more significant price growth.
Rightmove said the market was “stable” despite global uncertainty created by the Iran conflict, with sales just 2% behind last year’s strong market and 5% above 2024.
