Consumer spending on mortgages and rent rose in April, while ground rent and service charges sting leaseholders

• Consumer spending on housing costs increased 3.6 per cent in April – the first time the rate of growth had increased since December 2023
• Only 15 per cent of consumers say they aren’t confident in their ability to afford monthly mortgage or rental payments, a slight improvement compared to March (16 per cent)
• Just one third of those paying service charges and/or ground rent feel their fees are affordable
• 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 
• Barclays Property Insights combines transaction data from millions of Barclays current accounts with consumer research to provide an in-depth look at UK housing costs

Data sourced from millions of Barclays current accounts* reveals that consumer spending on rent and mortgage payments accelerated in April, reversing the encouraging slowdown in the first quarter of the year. Meanwhile, leaseholders are finding their housing costs compounded by high service charges and ground rents. To compensate, household spending on areas such as homewares, electronics and DIY fell by -4.1 per cent, with many consumers opting to postpone renovations.

Barclays Consumer Spend data shows that UK spending on rental and mortgage payments rose 3.6 per cent year-on-year in April, ending the three-month slowdown in spending witnessed from January to March. Reassuringly, growth remains below February’s figure (4.7 per cent), and also below the 12-month average (6.5 per cent), indicating that costs are still heading in the right direction over the longer term.

Just one in four Brits (25 per cent) is confident in the strength of the UK housing market, following the volatility of the last year. Despite these concerns for the macro environment, confidence in personal finances remains steady, as only 15 per cent of consumers do not feel confident in their ability to afford monthly mortgage or rental payments, a slight improvement from 16 per cent in March.

Service charges sting

Service charges and ground rent increases have become an unexpected burden for many affected homeowners, as just over a third of payers (37 per cent) regard these costs as affordable. Meanwhile, on top of the high price tag, most leaseholders feel blindsided by the charges, as just a third (33 per cent) recall being made aware of the costs before purchasing their property, and only 23 per cent saying they understood the rate at which the costs would increase.

On top of affordability, level of service is a growing issue as leaseholders see few improvements to their properties despite the premium – only 13 per cent feel they get good value for money, and even fewer (10 per cent) believe the money from their fees is spent effectively. Nearly a fifth (17 per cent) of those paying service/ground rent fees are also concerned they won’t be able to sell their homes because of the charges.

DIY down as consumers cut costs

Brits are trying to cut down on their household costs, with 40 per cent saying they will not spend on their home or garden ahead of the summer. Many are opting to postpone renovations or home improvement, as consumer card spending on household categories such as homewares, electronics and DIY fell by -4.1 per cent 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.”

-ENDS-

Notes to Editors

Established in 2014, Barclays issues a monthly press release commenting on consumer spending trends.

Across its issuing and acquiring businesses, Barclays sees nearly half of the nation’s credit and debit card transactions, which provides us with unique insight into UK consumer spending. This press release is based on consumer card spending data from Barclays’ issuing business – i.e. Barclays debit card and Barclaycard credit card transactions. It relates to the period 17th February 2024 – 22nd March 2024. It is compared to the period 18th February 2023 – 24th March  2023.

* Mortgage and rental payments data sourced from Barclays current accounts – e.g. transactions identified as direct debits and bank transfers to mortgage lenders and private landlords. Please note: the data includes payments to multiple lenders (including Barclays). It relates to the period 23 March 2024 – 19 April 2024. It is compared with the period 25 March 2023 – 21 April 2023.

The Barclays Consumer Spend research in this press release was carried out between 19 April and 23 April 2024 by Opinium Research on behalf of Barclays. There were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, and income group.

For more information, please contact Annie McQuoid at annie.mcquoid@barclays.com

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