London flats struggle to sell as market slumps

The market for flats in London is facing a significant downturn, with a substantial proportion failing to attract buyers. Zoopla reported that in 2025, 88% of flats listed for sale in inner London remained unsold after six months. This contrasts sharply with previous years and highlights a broader national trend where only 50% of flats nationally found buyers by August, compared to 65% of houses, according to Rightmove.

Reasons for the market slump

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Property experts attribute the weak sales performance to a combination of factors. Richard Donnell, executive director at Zoopla, points to post-pandemic shifts in lifestyle, with people prioritising houses and working from home, leading to a reduced demand for flats. He also cited higher mortgage rates and concerns over additional ownership costs, such as service charges and ground rents, as significant deterrents. Flats in inner London are particularly affected due to their higher price points, more substantial service charges, and the inherent complexity of larger buildings.

Colleen Babcock, head of partner marketing at Rightmove, noted that London's market is disproportionately weighted towards flats, exacerbating affordability challenges. Increased borrowing costs, higher stamp duty, and limitations on schemes like the Lifetime ISA present further hurdles for both first-time buyers and those looking to move within the capital.

Impact on flat owners

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The difficulties in selling flats have had a profound impact on owners. James Schaife, 36, from north London, described being on the verge of bankruptcy after his one-bedroom flat had been on the market for four years. He purchased a shared ownership stake in the property in 2017, but after relocating for work, he has struggled to find a buyer. Schaife claims his housing association, Newlon Housing Trust, has restricted his choice of valuers and is unwilling to renew a consent-to-let agreement, forcing him to rent out the property while he seeks a sale. He stated the situation has delayed his plans to start a family.

Building safety concerns have also rendered some flats unsellable. Sophie Bishener, a leaseholder and campaigner with the End our Cladding Scandal group, described flats with unremediated cladding as 'prisons'. She highlighted that even buildings that have undergone repairs are affected by a market distrustful of leasehold properties, compounded by high management pack fees and solicitors hesitant to handle buildings covered by the Building Safety Act.

Rise in new build complaints

The issues extend to new-build properties, with the New Homes Ombudsman Service reporting a significant increase in complaints. In 2025-26, the service received just over 1,800 complaints, a rise from fewer than 600 the previous year, with defects and snagging being the most frequent issues. While the ombudsman attributes some of this rise to increased eligibility and awareness, it points to underlying problems in new home construction.

Developer costs and housing supply

Developers are also facing increased costs, which they claim is impacting London's housing supply. The Home Builders Federation estimates that the cost of delivering a new property has risen by an average of £76,000, or over 20% of the average new home value. This increase is attributed to higher labour and material expenses, additional regulations, and tax rises. James Stevens, director for cities at the Home Builders Federation, warned that the collapse in London's housing supply poses a significant threat to the capital's economic and social future, with housing starts at an alarmingly low level.