The UK flat market is experiencing a supply-demand imbalance as landlords exit the sector ahead of upcoming rental reforms while buyer preferences shift towards houses, according to data from Hamptons.
First-time buyers are increasingly purchasing houses over flats, with 73% now opting for houses compared to 65% in 2015. The average first-time buyer age has risen to 34, reflecting changing market dynamics.
Rising service charges deter buyers
Several factors are contributing to weakened demand for flats, including mortgage rates above 5%, the end of the Help to Buy scheme, and escalating service charges. Average service charges have reached £2,405 annually, representing a 4.6% year-on-year increase and a rise of more than 30% over five years.
David Fell, Lead Analyst at Hamptons, told The Times that increases have been most significant for owners of smaller flats. “These are also flats which are most likely to be single-occupant, so charges are being paid by a single salary,” he said.
Supply surge driven by landlord exits
The number of flats coming to market in England and Wales increased by 12% in March compared to the previous year, double the rate recorded for houses. Only 48% of flats listed in January had secured a buyer by March, compared to 60% of houses.
A significant portion of the supply increase stems from landlords selling properties ahead of the Renters’ Rights Act, which comes into force on 1st May. Separate data from Pepper Money estimates more than 65,000 homes will exit the rental sector, contributing to wider challenges in the UK housing market.
Price pressures emerge
The supply-demand imbalance has resulted in 19.9% of flats selling at a loss in 2025, rising to 38.1% for studio apartments. By contrast, fewer than 5% of houses were sold below their purchase price.
The divergence in performance between flats and houses reflects broader shifts in buyer preferences and affordability constraints. With landlords reassessing their portfolios amid regulatory changes, the flat market faces continued headwinds in the near term.
