The UK’s housing market continues to navigate turbulent waters as rent and mortgage costs surged by 8.2% year-on-year in November, reaching a 14-month high.
The strain is particularly felt by homeowners rolling off fixed-rate deals and facing higher interest rates, as detailed in the recent Barclays Property Insights report.
Despite these pressures, many Britons are demonstrating resilience and adaptability, with a growing focus on energy efficiency as a strategy to mitigate rising household costs.
Concerns over interest rates have slightly eased since the Bank of England reduced the base rate to 4.75%, with 59% of consumers expressing worry in November compared to 63% in June 2024.
INCREASING PAYMENTS
However, the strain of increasing rent and mortgage payments persists, with over half (56%) of UK residents feeling anxious about these expenses. In response, 41% are altering their spending habits, and nearly a third are actively seeking ways to lower housing costs.
Beyond financial adjustments, a significant number of homeowners are redirecting their attention toward long-term savings through energy-efficient home improvements.
ENERGY EFFICIENCY
Energy costs remain a dominant concern, even as utility spending in November 2024 fell by 10.6% compared to the same period the previous year.
This decline marks the smallest reduction since July, highlighting the ongoing financial challenges posed by the energy price cap hike in October.
Amid these pressures, a quarter of UK homeowners are investing in energy-saving upgrades, driven by the dual incentives of reducing costs and increasing property value.
SOLAR PANELS
Popular improvements include loft insulation (48%), wall insulation (37%), double or triple glazing (35%), and solar panels (33%).
However, these efforts face obstacles, with 35% of homeowners citing confusion about suitable retrofitting options as a barrier, according to the Bank of England’s Electrifying the Future report.
Financial concerns also limit the pace of retrofitting. A staggering 69% of homeowners who can afford energy-efficient upgrades believe the Government should subsidise these changes.
Meanwhile, two-thirds of homeowners advocate for more decisive government action to transform how homes are heated and insulated.
Barclays has proposed five key recommendations to address these barriers, including the establishment of a Retrofitting Delivery Authority to guide policy implementation and foster collaboration between public and private sectors. This cross-sector approach is seen as essential to scaling up the UK’s transition to greener housing.
STAMP DUTY HURDLE
As homeowners and renters grapple with high housing costs, stamp duty remains a formidable challenge.
Nearly a quarter (23%) of homeowners consider it the most significant barrier to purchasing their next property, with younger buyers feeling the greatest impact.
Among those aged 18-34, 39% cite stamp duty as a hurdle, compared to just 15% of individuals over 55.
For renters, stamp duty reforms announced in October have complicated home-buying plans.
In London, 27% of renters reported postponing their aspirations due to the changes, though the primary obstacle remains the steep cost of property, as noted by 64% of respondents.
CHRISTMAS SPENDING
This year’s holiday season is also reflecting economic caution and sustainability trends.
Many consumers are repurposing decorations, with 42% opting to reuse rather than purchase new items. Meanwhile, 24% are embracing energy-efficient LED lighting, and over half (51%) are foregoing Christmas trees and decorations entirely to allocate funds elsewhere.
Renters are particularly affected, with 56% skipping seasonal décor due to financial constraints or the impermanence of their housing situations.
POSITIVE TREND
Mark Arnold, Head of Mortgages and Savings at Barclays, says: “While the rise in rent and mortgage payments dampens optimism following the recent base rate reduction, the growing interest in retrofitting signals a positive trend.
“These improvements not only reduce energy bills but also enhance property value and environmental sustainability.
“However, much work remains to raise awareness of retrofitting options and make them accessible. The Government has a pivotal role in facilitating this transition, supported by stronger collaboration between public and private sectors.”
