House and flat price gap hits 30-year high

Houses now cost 1.7 times more than flats across the UK, as weaker flat price growth and leasehold costs widen the gap between the two parts of the market.

The difference between house and flat prices has reached its widest point in 30 years, according to Zoopla.

Its latest analysis shows the average UK house now costs 1.7 times more than the average flat, up from 1.3 times in 2016.

Over the same period, average house prices have risen by 43%, while flat prices have increased by 10%.

Buyers face wider choice, but more checks

Richard Donnell, executive director at Zoopla, said: “The gap between house and flat prices has never been wider, and for buyers who are prepared to do their homework, that presents an opportunity.

“For many, flats remain the main route into home ownership, particularly in London and the South East where the cost of buying a house is higher.

“Buying a leasehold flat is more complex than buying a house – lease length, service charges and ground rent terms all matter and vary significantly from one property to the next.”

He added: “This complexity is not the same as risk, and the leasehold system is being actively reformed.”

“Buyers who invest time to research and understand the system and get support can take advantage of the gap between flat and house prices.”

Regional gaps widen outside London

The average flat now costs £193,000, compared with £327,000 for a house, leaving a difference of £134,000.

Across the UK, houses are 2.3 times more expensive than flats, compared with 1.8 times 10 years ago.

The widest gap is in the West Midlands, where the average house costs £296,000 and the average flat £120,000 – a gap of 2.5 times.

Close behind is Yorkshire and the Humber with houses costing 2.4 times as much as flats.

The East Midlands, North West, North East and South East all have ratios of at least 2.3 times.

Scotland is an exception where houses cost 1.9 times as much as flats, barely changed from 1.8 times in 2016.

That partly reflects the different ownership system. Scotland does not use the same long leasehold model as England.

Flat owners typically own their property outright and share responsibility for communal repairs.

Leasehold costs remain a concern

In England, leasehold remains the main form of flat ownership and four in five flats listed for sale are advertised on that basis.

Zoopla estimates that a typical leaseholder pays £200 a year in ground rent and £1,900 in service charges, taking the average annual bill to £2,100.

The draft Commonhold and Leasehold Reform Bill would also cap existing ground rents at £250 a year, stop the sale of new leasehold flats and make commonhold the default tenure for new-build flats.

Zoopla says average leasehold running costs typically amount to between 0.7% and 1.3% of a property’s value each year.