Rent and mortgage costs increased by 3.6% in April with leaseholders facing additional pressures through ground rent and service charges.
This is according to Barclays which has analysed its current accounts to assess how housing costs are impacting consumers.
It said the increase in housing costs in April was the first time the rate of growth had increased since December 2023.
It saw a slight improvement in confidence with the proportion of consumers it quizzed who said they weren’t confident in their ability to afford monthly mortgage or rental payments falling slightly (15% in April versus 16% in March).
But for those paying services charges and ground rent the financial burdens were compounded, with only a third saying their fees were ‘affordable’.
Barclays said nearly one in four leaseholders were not aware of the rate at which their ground rent and service charge fees could increase prior to purchasing their property, so the costs they faced had been ‘unexpected’.
On top of affordability, level of service was a growing issue, said Barclays, which found leaseholders were seeing few improvements to their properties despite the premium.
Renovation plans delayed as consumers cut costs
The research also highlighted how many people were cutting down on costs by delaying plans to make home improvements.
Barclays said spending on homewares, electronics and DIY fell by 4.1% in April.
Mark Arnold, head of savings and mortgages at Barclays, said: “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.
“Our data shows that Brits are still facing higher rent and mortgage payments, although costs are still slowing down over the longer term.
“Many homeowners have additionally been hit by high service charges in the wake of increased inflation.
“Prospective buyers considering a leasehold property, especially in managed flats, should ask about these costs early in the process – 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.”
