Almost four in ten London flats sold after five to ten years of ownership changed hands below their previous purchase price. London recorded the highest rate among British regions, while only 3.8% of houses sold over a comparable holding period were resold at a nominal loss.

The distinction matters. e.surv measured repeat sales registered in the 12 months to August 2026. Its 39.5% figure does not apply to all London flat transactions and does not account for inflation, mortgage interest or rental income.

Flats are falling behind houses

The October 2026 e.surv analysis found a pronounced difference between properties held for five to ten years. In London, 39.5% of flats resold below their previous price, compared with just 3.8% of houses. Across Great Britain, the equivalent figures were 26.7% for flats and 2.2% for houses.

The South East recorded a 34.5% flat loss rate, the East of England 31.4%, and Scotland just 9.8%. These are nominal resale outcomes, not a calculation of each owner's total investment return.

Repeat sales after 5–10 years of ownership

Why London flats are particularly exposed

The weakness predates the latest survey. International Investment reported that London's average flat price was approximately £431,000 in June 2026, down 4.7% year on year. The revised Land Registry series put the typical flat about £2,000 below its level a decade earlier in nominal terms.

Flats are more exposed than houses to shared building costs and tenure obligations. Buyers increasingly examine service charges, remaining lease length, major works, building safety and mortgage availability alongside the purchase price.

Service charges change the investment calculation

London's average annual service charge reached £2,801 in 2025, about £233 a month. It increased 6.4% in one year and more than 64% over a decade. These recurring costs sit on top of mortgage payments and other ownership expenses.

Two similar flats can therefore have very different total costs. Lifts, concierge services, extensive shared facilities and major repairs can create obligations that are not obvious from the headline asking price.

Leasehold and building safety weigh on demand

Most English flats have historically been sold as leasehold property, giving owners rights for a specified term. Leasehold does not automatically make a home a bad investment, but short remaining terms and high charges can reduce mortgageability and resale demand.

Following the Grenfell Tower fire, buyers and lenders also examine external walls and fire safety. Some buildings require additional assessments, although the requirements depend on building type and lender policy.

Reform does not automatically fix existing leases

The UK government plans to make commonhold the standard model for most new flats. Commonhold provides indefinite ownership of the unit alongside collective management of shared areas. Existing leasehold properties will not switch automatically; the final reform timetable and terms remain subject to legislation.

The flat–house performance gap began developing around 2017. It cannot be attributed to the proposed reform alone. Borrowing costs, building-specific risks and buyer preferences also matter.

What a resale loss actually measures

A flat bought for £450,000 and sold seven years later for £430,000 has lost £20,000, or 4.4%, in nominal sale value. Its overall investment return may differ once rent received, acquisition costs, financing, maintenance, taxes and disposal costs are included.

The survey therefore identifies the frequency of below-purchase-price resales within a defined cohort. It does not show that four in ten London flat owners suffered a negative total return.

What buyers and investors should check

The e.surv findings make property-level due diligence more important. Investors should examine lease length, service charge history, reserve funds, potential major works, fire-safety documentation, mortgage options and comparable completed transactions.

London remains a large, liquid real estate market, but a city-wide housing shortage cannot guarantee capital appreciation for every flat.

FAQ

Do 40% of all London flats sell at a loss?

No. The 39.5% rate concerns flats resold in the 12 months to August 2026 after five to ten years of ownership.

How does the rate compare with houses?

Just 3.8% of London houses sold after the same holding period went below their previous purchase price.

What was the rate in Scotland?

The share of flats resold below their prior purchase price after five to ten years was 9.8%.

Why are London flats underperforming?

High borrowing costs, rising service charges, leasehold obligations, building-safety issues in some blocks and changing demand all contribute.

Does the analysis include rental income?

No. It compares recorded acquisition and resale prices, not total returns including rent, inflation and transaction costs.