London's Flat Market Struggles Amid Rising Costs and Safety Concerns

Flats in London, once a highly sought-after property type, are now struggling to find buyers. Data from property portals indicates a significant slump, a stark contrast to the market conditions witnessed just a few years ago.

According to Zoopla, 88% of flats listed for sale in inner London in 2025 failed to sell within six months. The property site also notes that the price gap between flats and houses is the widest it has been in three decades. Richard Donnell, executive director at Zoopla, attributes this shift to post-pandemic changes in living preferences, with many people prioritizing space and remote work, alongside concerns about the rising costs associated with property ownership, including service charges and ground rents. UK mortgage lenders have also increased the cost of home loans, further impacting affordability.

Rightmove reports that as of August, only 50% of flats listed for sale nationally found a buyer, compared to 65% of houses. Nationally, the average price for a flat has decreased by 2% over the past year, the largest drop for any property type. Compared to August 2021, flats have seen only a 4% price increase nationally, the lowest among all property types. Colleen Babcock, Rightmove's head of partner marketing, highlighted that London's market is particularly affected due to its high concentration of flats and broader affordability challenges, including higher borrowing costs, increased stamp duty, and limitations of schemes like the Lifetime ISA in high-priced areas.

Several factors are contributing to the difficulty in selling flats. Higher borrowing costs, escalating service charges, and complexities related to leasehold and shared ownership have damaged their appeal. James Schaife, who has been trying to sell his one-bedroom flat in north London for four years, describes the situation as being "on the verge of bankruptcy." He bought a shared ownership stake in 2017, but after moving out of London in 2022, he has faced significant challenges in selling the property, including claims of being forced to use a limited selection of valuers chosen by the housing trust, despite estate agents suggesting the flat is overvalued. The situation has also impacted his and his partner's plans for starting a family.

A spokesperson for Newlon Housing Trust stated that they do not recognize this portrayal and emphasized adherence to strict rules for resales to protect public funds and prevent the misuse of subsidized affordable housing. They acknowledged that the sales market for flats is currently stagnant and that the saleability of any home is subject to market fluctuations beyond their control.

Flats with building safety concerns are also proving exceptionally difficult to sell. As of July 2026, nearly 4,700 residential buildings over 11 meters in height are still being monitored due to unsafe cladding, with remediation work incomplete on 61% of them. Sophie Bishener, a leaseholder and campaigner, described flats with unremediated unsafe cladding as "prisons," causing a "devastating" impact on residents' lives. She is unable to move to a larger property for her growing family because her building requires further fire safety repairs. Even buildings that have undergone remediation face challenges due to a market perceived as distrustful, with hurdles like expensive management packs and solicitors hesitant to handle buildings covered by the Building Safety Act.

Developers are also reporting increased costs for building new homes, with estimates suggesting a rise of £76,000 per home due to higher labor and material costs, additional regulations, and tax increases. This adds pressure to London's already limited housing supply. The Home Builders Federation (HBF) noted that housing starts in London have fallen to alarmingly low levels, calling for an urgent overhaul of housing and planning policy. The HBF also reported a significant number of unallocated affordable housing units under Section 106 agreements.

In response to these challenges, the government is implementing measures such as the Mortgage Guarantee Scheme to support homebuyers with small deposits and capping ground rents at £250. Leasehold is also being phased out for new homes. Efforts are underway to expedite the removal of unsafe cladding and hold responsible parties accountable. The Mayor of London's office is working with various stakeholders to increase the delivery of homes and supports reforms to the leasehold system, while also implementing initiatives like the Service Charges Charter to improve transparency and fairness in service charge management.

The current difficulties in London's flat market suggest a need to re-evaluate not just the quantity of housing being built, but also the type and suitability of homes being offered to meet the evolving needs and financial realities of prospective buyers.