Flats v houses

Flats are less attractive now than ever before due to onerous service charges linked to rising costs and additional regulatory red tape, some of which is a result of the Grenfell disaster. Ground Rent and Management fees are at an all time high and this has to be paid in addition to a mortgage payment. The Leasehold Reform Act received Royal Assent back in May 2024 and none of it has come to pass yet. Reform is needed to make these properties more saleable and to have more appeal as their bad reputation are part of the reason the market is stalling as eager sellers are desperate to move on.

It's no surprise that First Time Buyers are bypassing the traditional starter-home flats for houses, given the lingering cladding issues and the ever-escalating service charge (and ground rent) problems. When you then add the cost of moving, stamp duty in particular, all of these factors encourage the purchase of houses that will be home for a significant timescale. It will require significant government intervention to accelerate the replacement of flammable materials and regulate service charges; until then, this trend will continue to grow.

Flats are underperforming because buyers are becoming much more selective. It is not just about the front door anymore; it is service charges, ground rent, cladding history, lease length, management quality, lender appetite and whether the flat still feels affordable once all monthly costs are included.

Houses have held up better because they offer more control: no service charge shock, no lease complications and usually more space. In a higher-rate market, buyers are asking harder questions, and flats with weak fundamentals are being punished.

This can be a buying opportunity, but only for disciplined buyers. A discounted flat is not automatically a bargain if the service charge is rising, the lease is short or the building has unresolved issues.

My view is simple: do not avoid flats blindly, but do not buy one lazily. The right flat, in the right building, at the right price, can still work. The wrong flat can become very hard to sell.

Flats were once the favoured types of properties for first time buyers and investors. But the race for space in 2020, and Government policies deterring new investors into the market, flats are now out of favour. This is a good buying opportunity for the right flat in the right location which has always been key