Flats used to be the way in. First rung, first flat, first taste of ownership. Not any more. Eighty per cent of flats on the market today don’t sell within six months. In a flat (the clue is in the word) property market, flats have landed at the bottom of the pile.
Why? Start with the money. Ground rent averages around £200 a year. Service charges now average over £2,000, and often much more.
Add cladding remediation bills, some running into tens of thousands, and a lease extension that can cost a five-figure sum before a buyer even gets the keys. Buyers do the sums, and many decide not to buy a house.
Then there’s the seller problem. Between 40 and 60 per cent of flats on the market belong to landlords, not owner-occupiers. A landlord collecting rent has little pressure to sell at the market price.
Eighty per cent of flats on the market today don’t sell within six months
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They can sit and wait. Owner-occupiers, needing to move for a job or a growing family, price closer to reality.
The result is a market split between sellers who must sell and sellers who don’t have to, and buyers who can tell the difference.
Add the stamp duty trap. First-time buyers get relief up to a threshold, but only once. Squandering that tax relief on a flat that you might only live in for a year or two just doesn’t make sense any more.
Government reform means there are proposals to cap ground rents. Service charges are harder to touch directly, beyond strengthening the right to manage and the right to challenge costs.
Useful, but not a solution in a world where even finding a tradesperson willing to quote can be a challenge.
None of this means flats is unsellable. There is value for buyers willing to dig into service charge accounts, check the building’s cladding status, and understand exactly what they’re taking on.
But the days of a flat selling itself are, for now, over. Sellers need patience, sharp pricing, and full transparency. I am often asked, “Will flats ever recover?”
Between 40 and 60 per cent of flats on the market belong to landlords, not owner-occupiers
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My answer is a very definite yes, but only when the rest of the market picks up sufficiently that flats can no longer be leapfrogged by those who can make their first purchase of a freehold house.
For the time being, that seems quite a distant possibility.