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This is Money request: 30% of studio flats have sold at a loss over the last year that were previously bought in the last 20 years

ended 25. August 2026

This is Money request: 

I have had the data run on studio flats and around 30% have sold at a loss over the last year that were previously bought in the last 20 years.

Sales volumes are down. They have increased in value less than other flats over the long run.

They are performing badly in some London areas including Lambeth, Chelsea and Ken, Westminster, Wandsworth, Hammersmith + Fulham, Croydon, Lewisham. But also in other parts of the country such as Leeds, Birmingham and Salford.

  • Are we seeing these once popular starter homes and pieds-à-terres lose their buyer appeal? And why?
  • Do you know what sort of people are still buying them?
  • The average studio service charge is £1,907 per year, which is 34% more per square foot than one beds. Have they become financial millstones?
  • If you owned a studio, would you sell and just take a loss or keep as a rental investment?
  • Are you seeing mortgage lenders less keen on them and is that also causing a problem for owners who wish to move on and let them out?
  • What minimum size tends to be too small for mortgage lenders?
  • Any anecdotes you have would be great?

Responses asap.

10 responses from the Newspage community

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Tony SanchezVerified
Founder at Bridging Loan Directory
The figures suggest the problem is not that studio flats have no buyers, but that their buyer pool narrows when the market weakens. A first-time buyer comparing a studio with a one-bedroom flat may decide that the saving is outweighed by limited space, a high service charge and concern about resale.

Mortgageability can reinforce that problem. Lenders do not all apply one minimum size, but very small units, unusual layouts and properties with weak local resale evidence may attract fewer lenders. That matters to the current buyer and again when the owner wants to sell or refinance.

An investor may still buy where the rent, lease, service charge and local demand justify the price. I would not automatically sell at a loss or retain it as a rental: owners need to compare the likely net rental return and future costs with what they could do with the released capital. A studio can become difficult when its costs behave like those of a larger flat but its resale market remains smaller.
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Hannah VandervenninVerified
Director - Mortgage Adviser at The Mortgage Consultancy
I think studios are being squeezed from both sides. Buyer preferences have changed post-Covid, with more people valuing space, outdoor areas and less need to live right on top of London offices, while they can also be harder to finance.

Lenders can be cautious, particularly with very small studios. Around 30sqm is a common minimum, and high service charges can create another issue. Once charges start approaching 1% of the property value each year, some lenders become uncomfortable around affordability and future resaleability.

Interestingly, we are still seeing landlord interest. The lower purchase price can mean less capital and stamp duty required, while rents can still be relatively strong. But the numbers have to work after service charges.

If I owned one, I wouldn’t automatically sell at a loss. I’d look at rental return, refinancing options, service charge trajectory and likely future buyer demand before deciding.
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Matt CoulsonVerified
Founder at Heron Financial Ltd
A big part of the studio story is mortgageability, and rarely mentioned. Studios are the hardest flats to finance. Many lenders set a minimum floor area, often around 30 square metres, and some won't lend below that at all, with tighter rules on ex-local-authority or high-rise blocks. Fewer willing lenders means a smaller pool of buyers, and that caps both the price and how easily you can sell later. That's the real reason so many sell at a loss: the flat being small is only half of it, the bigger issue is that limited finance thins demand behind it. High service charges make it worse: close to £1,900 a year on a low-value asset eats any return and deters buyers. Most current buyers are cash or investors who don't need a mortgage, which shrinks the pool again. I'd be wary of treating a studio as an easy stepping stone or investment. The ones that hold up are a decent size, well located, and in a block a mainstream lender likes. The rest are hard work, both to finance and to sell.
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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
Why buy a studio when other flats are being heavily discounted? Flats, especially London, are being heavily discounted thanks to the service charge noose. I was recently speaking to someone who was considering a flat which had been substantially reduced. The £6500 p.a service charge and £2k pa contribution towards the maintenance charge were probably contributing factors. If you are going to pay service charges, future proof yourself with a larger flat rather than piling into a studio.
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Mark AlexanderVerified
Founder at Property118.com
Studio flats have become the worst of both worlds: too cramped for many owner-occupiers, while disproportionately high service charges can destroy the rental yield and deter investors. The buyer pool narrows further where the floor area falls outside mainstream mortgage lenders’ criteria, leaving some owners with a property that is expensive to hold and difficult to sell. I would not automatically crystallise a loss, but I would compare the genuine net rental return and future demand against the cost of keeping it—a commercial decision, not an emotional one.
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David StirlingVerified
Independent Financial Adviser at Mint Wealth
Studios have gone from a smart first step to a millstone. You're paying near enough the same service charge as a one-bed for a third of the space, and lenders are getting cold feet below 30 square metres, therefore the pool of people who can actually mortgage one keeps shrinking.

If I owned a studio today, I wouldn't wait for the market to prove me wrong: I'd run the numbers on rental yield after that service charge, and if it doesn't stack up, sell now rather than in five years' time alongside everyone else reaching the same conclusion.
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Tracey DixonVerified
Buy-to-Let Mortgage Specialist & Owner at Pure Mortgage and Protection
Studio flats can still work for the right buyer, but they can be harder to mortgage and ultimately harder to sell. Some lenders impose minimum size requirements, often around 30 square metres, while others won’t lend on studios at all.
For landlords, the cheaper purchase price can look attractive, but high service charges can quickly eat into the rental return.
I wouldn’t automatically sell simply because a studio has fallen in value. I’d look at the rental yield, mortgage costs, service charges and future saleability first. A studio can be cheap to buy, but that doesn’t necessarily make it cheap to own – or easy to sell.
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Iain ThompsonVerified
Director at Evolve Finance
At an average service charge of £1,907 per year studio flats have transitioned from popular starter homes into genuine financial millstones.

The core issue is a pincer movement of escalating service charges and brutal mortgage lender restrictions.

Crucially for first-time buyers, lenders deduct these high service fees directly from net income during affordability stress tests, severely reducing their maximum borrowing capacity and pricing them out entirely.

Lenders are cautious about letting owners pivot to Consent-to-Let options.

For Landlords considering buy to let opportunities, the service charge must be legally absorbed, crushing buy-to-let net yields.

Financing them has become a brokerage minefield. Most mainstream lenders enforce a strict minimum floor area—typically 30 square metres. Anything below this threshold is flagged as 'unmortgageable'.

Taking a loss to free up capital is often the only realistic exit.
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Jamie AlexanderVerified
Mortgage Director at Alexander Southwell Mortgages
Studio flats have quietly become one of the trickier conversations in mortgage advice. The appeal made sense when they were affordable entry points into the market, but a combination of high service charges, leasehold complexity and shifting buyer appetite has left a lot of owners in a difficult spot.

On the lender side it is increasingly patchy. Some are perfectly comfortable with studios, others have minimum size requirements that rule them out entirely. Anything below 30 square metres tends to set off alarm bells, and some lenders will not touch them regardless of size if the service charge is disproportionate to the value.

For owners sitting on a loss, my instinct would be to hold and rent rather than crystallise a loss in a market that is not working in your favour right now. That is not always possible, and it depends on the numbers, but selling into weakness rarely feels good six years later.
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Thomas BoughtonVerified
Founder at Artillium Real Estate Finance
Undoubtedly, one of the main reasons studios have lost their appeal is the often unpredictable service charges and ongoing maintenance costs. Compared with 1–3 bedroom flats in the same development, studios can end up carrying significantly higher costs per square foot, making them increasingly difficult to justify from both an ownership and investment perspective.

I also think buyers are becoming far more conscious of the SDLT implications of their first purchase. Why use up your FTB allowance on a £350k studio when, with a little more saving or patience, you could stretch to a 1-bed instead? For many buyers, the 1-bed offers better long-term value, flexibility and resale value, making the additional spend much easier to justify.