UK Housing Costs Surge: Renters and Owners Feel the Pinch

UK households are facing a significant rise in housing costs, with a staggering £66 billion increase over the past five years, according to property group Savills. This equates to a 41% jump in overall housing expenses, impacting both renters and homeowners.

The data reveals that mortgage borrowers are bearing the brunt of this surge, particularly those coming off fixed-rate deals. In 2025, mortgage interest payments alone accounted for a substantial £53.6 billion, a 9% increase from the previous year.

Lucian Cook, head of residential research at Savills, highlights the long-term implications of this trend. With homeowners opting for longer-term fixed mortgages, higher interest rates could have a prolonged effect on housing costs and household spending.

The recent economic turmoil, exacerbated by US and Israeli strikes on Iran, has added to the uncertainty. This has led to a potential wave of inflation, which mortgage markets are quick to reflect in their rates.

The average two-year fixed-rate mortgage has already surpassed 5%, and lenders are adjusting their deals accordingly. For the 8.8 million mortgage holders, this translates to an average annual payment of £13,000, including capital repayments.

In the rental market, costs have risen more gradually, with a 2.75% increase in 2025. Private sector landlords received £81 billion, while private renters experienced a 27% rise in costs over five years. Interestingly, London has seen the smallest increase in housing costs, at 36%, compared to other regions.

Property website Rightmove notes that new seller asking prices have increased, but the market remains steady despite global uncertainties. Sales are only slightly behind last year's figures, indicating resilience in the face of economic challenges.