Sky-high mortgage and rental costs erode renters' faith in the UK's real estate sector
Rising Rents Pose Challenges for UK Renters Aiming for Home Ownership
In the current economic climate, many renters in the UK are finding it increasingly difficult to save for a deposit to buy a home. According to recent reports, consumers are seeing more of their disposable income diverted away from savings due to rising costs.
The Office for National Statistics reported inflation as 3.6% in June 2025, and spending on utilities increased by 2.2% in the same period. These rising costs, combined with the average UK property costing £271,619 in June 2025, an increase of 2.5% from the previous year, create a significant barrier for those looking to enter the property market.
Renters, in particular, are finding it ever harder to save while keeping up with these costs. Barclays found that spending on rent and mortgages increased by 5.2% in the year to July 2025, and 37% of renters say they are unable to afford to buy a home in their preferred area. Renters are paying on average £84 more monthly than a year ago, with average rents reaching record highs at £1,344 per month nationally.
These rising rents are significantly impeding renters' ability to save for home ownership. The rising monthly rental costs consume a larger share of renters' income, leaving less disposable income available to save towards a home deposit or related purchasing costs. Renters on lower incomes struggle disproportionately with affordability, often unable to keep up with rent increases or access cheaper housing alternatives.
With rents rising faster than wages, many renters face a growing barrier to accumulating sufficient savings for homeownership deposits, prolonging their time in the rental market. In some regions, the cost of renting has risen faster than mortgage expenses, reducing the financial incentive or feasibility for tenants to transition into homeownership.
Barclays suggests that there is still hope for renters, as they are still seeing savers create strong habits. However, the main factors contributing to increased housing costs for renters include high demand relative to supply, post-pandemic rent inflation, landlord market shifts, rising costs for landlords, regional factors, general inflation, and rising bills.
Despite these challenges, only 12% of renters believe they will become homeowners within the next year. Only 26% of consumers, both homeowners and renters, are confident in the UK housing market. These findings highlight the urgent need for policies and initiatives to address the housing affordability crisis and support renters in their journey towards home ownership.
- Renters' savings for homeownership are being challenged due to the rapid rise in monthly rent payments, which is eating into their disposable income.
- In the current housing market, rising costs and increased rents are making it difficult for renters to save sufficiently for personal finance needs, such as a deposit for buying a property.
- The exorbitant costs of real-estate and high rents in the UK have pushed many renters away from investing in property, as they struggle to accumulate the necessary savings for homeownership.
