In April, consumer spending on rent and mortgage payments in the UK saw a 3.6% increase, marking the first growth in this sector since December 2023, according to Barclays Property Insights. The report highlights concerns particularly affecting leaseholders who face additional financial burdens due to high service charges and ground rents.
Mark Arnold, head of savings and mortgages at Barclays, noted, “Consumers and lenders alike are anticipating a drop in interest rates this year, but optimism is understandably tentative as the market is still feeling the effects of last year’s volatility.” He emphasized that while overall rent and mortgage payment increases are moderating, the rise in service charges due to inflation is hitting homeowners hard.
Despite a slight improvement in confidence regarding the ability to afford monthly payments — with only 15% expressing doubts, down from 16% in March — many leaseholders are struggling with affordability. Only a third of those paying service charges and/or ground rent find these fees manageable. Furthermore, about one in four leaseholders was unaware of the potential increase in these costs prior to purchasing their property.
The impact of these financial pressures extends beyond housing costs, with many Brits opting to cut back on non-essential spending. Consumer card spending on categories such as homewares, electronics, and DIY declined by 4.1% in April, reflecting broader cost-saving measures by households.
Arnold advises prospective buyers, particularly of leasehold properties, to inquire early about service charges and ground rents. “Not just for peace of mind, but also because lenders will want to know about any financial obligations to make sure mortgage payments will be affordable alongside other outgoings,” he said.
