Landlord flat sell-off puts prices under pressure

More than one in four flats for sale were previously let as landlords continue to dispose of properties hit by higher costs and weaker returns.

Flats, in particular, are bearing the brunt, an analysis from Thisismoney reveals.

Using exclusive Hamptons data, 26.7% of flats currently on the market were previously let, compared with 16.3% at the same point in 2018.

Among terraced houses, the proportion has risen from 10.3% to 13.1%.

Landlords head for exit

Nicholas Austin, a branch manager of RiverHomes in South West London, told the site: “Landlords are running for the door right now.

“The Renters’ Rights Act, high service charges post-Grenfell and other rising costs have made buy to let unprofitable for most amateur landlords.”

He added: “They’ve simply come to the point where they’ve realised this is no longer a sound investment.

“The first-time buyers who would normally be buying flats are either struggling to find mortgages or else they’re swerving flats altogether.”

Flat values under pressure

The problem is particularly acute in some city centres, where large numbers of flats were originally sold to investors.

In Birmingham’s B1 postcode, 61% of flat sellers have sold at a loss over the past 12 months, according to PropertyData.

Philip Jackson of Maguire Jackson estate agents said higher mortgage costs, service charges, maintenance bills and management costs had weighed on investors who bought flats more than a decade ago.

In one 320-flat Birmingham development, 32 one-bedroom apartments are currently for sale, with asking prices ranging from £130,000 to £220,000 and one heading to auction with an £85,000 guide price.

Buyers shun flats

Demand from property investors has also fallen, with their share of flat purchases dropping from 24% in 2016 to 13.3% in 2026.

Hamptons lead analyst David Fell said the market is now more reliant on first-time buyers and home movers, although leasehold concerns and service charges are discouraging some purchasers.

Zoopla figures show flat prices have risen just over 10% since 2016, compared with 43% for houses, while Hamptons says 22% of flats sold after a price reduction of at least 10%, against 13% of houses.

A typical flat now costs £193,000 compared with £327,000 for a house.