House prices in the UK have reached record highs, creating significant challenges for renters while reinforcing the financial strength of landlords. According to Halifax, the average property price hit a new peak of £299,138 in January 2025. As renters struggle with rising living costs, landlords are in a stronger position than ever.
Renters left with little financial security
The latest HL Savings & Resilience Barometer reveals that tenants are left with just £62 at the end of the month, compared to homeowners who have an average of £309 in spare income. Meanwhile, younger buyers, particularly Gen Z and Millennials, fare slightly better with £271 remaining, though they still lag behind older homeowners.
Fewer than half of renters (46%) have sufficient emergency savings, significantly lower than the 74% of mortgage holders who have a financial buffer. Rising rental costs and stringent affordability criteria for mortgages mean that many tenants remain trapped in long-term renting with little hope of homeownership.
Financial expert Sarah Coles, head of personal finance at Hargreaves Lansdown, explains, “When house prices hit a record high last month, homeowners felt a little bit richer and slightly smugger. Rising prices tend to boost confidence, making homeowners feel more optimistic about the future. However, it’s devastating for those who realise they’ll never be able to afford a home of their own.”
Landlords benefit from sustained demand
With homeownership becoming increasingly out of reach, landlords continue to benefit from strong tenant demand. Urban areas are particularly affected, with only 54% of city residents on track for property ownership, compared to 68% in rural locations. The affordability gap between renting and buying is widening, solidifying landlords’ role in providing much-needed housing.
The rental market remains resilient, as tenants have little choice but to continue renting while saving for deposits becomes more difficult. “Those who are priced out face sky-high rents for life, which swallow a disproportionate amount of their income,” Coles adds.
This situation has ensured steady rental yields for landlords, particularly in major cities where housing supply is limited. While some critics argue that high house prices create difficulties for first-time buyers, property investors have long maintained that the rental sector provides a crucial solution for those unable to purchase homes.
Property remains a smart investment
Despite fluctuating economic conditions, property remains a strong long-term investment. Mortgage rates have stabilised after recent turbulence, and with rents continuing to climb, buy-to-let remains a lucrative opportunity.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, highlights the long-term financial implications for tenants. “Today’s huge house prices are having a massive impact on our financial resilience for tomorrow. High rental prices take a chunk out of people’s day-to-day budgets, leaving them with less to save for their first home or retirement. It’s the main reason why renters are one of the key groups falling behind in the race for retirement resilience.”
According to the HL Savings & Resilience Barometer, only 16% of renters are on track for a moderate retirement income, compared to 52% of homeowners. This means those unable to buy a home may face financial struggles well into retirement, further emphasising the importance of property investment.
While some renters may receive family assistance or inheritance to bridge the financial gap, many will not have that luxury. The government’s Lifetime ISA scheme offers some help for those under 40, with a 25% bonus on savings up to £4,000 per year. However, with house prices still climbing, this initiative does little to ease the difficulties of buying a home in today’s market.
As tenants face mounting financial pressure, landlords continue to play a vital role in the housing sector. With demand for rental properties showing no signs of slowing down, investing in property remains a solid strategy for those looking to secure long-term financial stability.
