Landlords are trying to offload flats: Why is nobody buy them?

The property market is awash with landlords trying to offload flats thanks to falling profits and stricter regulations.According to exclusive data from estate agent Hamptons, some 26.7 per cent of flats currently on the market were previously rented out. This compares to 16.3 per cent of flats at the same point in 2018.While landlords are selling other types of property, the rise is not as drastic. Among terraced houses, 13.1 per cent of properties up for sale this year were previously let, up from 10.3 per cent in 2018.Landlords selling flats could put further pressure on an already tough sales market. A rising number of owner occupiers are also looking to dispose of apartments due to leasehold problems and climbing service charges, but some are struggling to do so. Philip Jackson of Maguire Jackson estate agents in Birmingham says landlords selling is part of the reason for the flats crisis at present.Unlike the countryside and suburbs, homes in city centres across Britain have been very heavily sold to investors.

Jackson says there are a vast number of buy-to-let landlords who bought flats more than a decade ago, often as an investment for retirement. 'These investors have been hit in recent years with increasing mortgage costs, higher annual service charges and associated property maintenance and management costs,' he says. In addition, they have seen 'weak capital growth and rental returns'.In one city centre development popular with investors, he says there are 32 one-bedroom apartments available for sale in a development comprising 320 flats.Jackson says the over-supply has been exacerbated by flats in some blocks only now becoming saleable again after cladding issues were fixed post-Grenfell. Philip Jackson, director of Maguire Jackson estate agents in BirminghamThe listing price of the flats for sale ranges from £130,000 to £220,000. However, some sellers are having to accept less. A one-bed apartment in the Birmingham building is lined up for auction with a guide price of £85,000.In the B1 postcode in Birmingham city centre, 61 per cent of flat sellers have sold at a loss over the past 12 months, according to research from analytics firm PropertyData.In London, one third of flats currently on the market were previously let. Nicholas Austin, branch manager of RiverHomes in South West London says: 'Landlords are running for the door right now.' 'The Renters Rights Act, high service charges post Grenfell and other rising costs have made buy-to-let unprofitable for most amateur landlords. 'They’ve simply come to the point where they’ve realised this is no longer a sound investment.'Who is in the market to buy a flat? The glut of flats comes at a time when the interest from buyers has dwindled even further.In 2016, 24 per cent of flat buyers were investors. In 2026 that has now fallen to 13.3 per cent. The holiday flat and pied a terre market is also waning. A 5 per cent stamp duty surcharge coupled with having to pay double council tax means there is only appetite from those with the deepest pockets.David Fell, lead analyst at Hamptons, says the flats market is now predominantly reliant on first-time buyers and home movers. However, distrust of leasehold and the burden of service charges means these groups are also less keen on flats. No interest: Flats are no longer attracting much interest from investors and second home buyers while first-time buyers and home movers are put off by leasehold tag and high costs'The bulk of new flats built during from the late 1980s to around 2016 were designed for, marketed at, and bought by investors,' says Fell. 'These were often amenity-rich developments that commanded higher rents which more than covered the cost of running them.'Today however, with fewer landlords in the market, these are homes that are mostly bought by owner occupiers. 'Meanwhile, the cost of maintaining and running these amenities has risen - and with owner occupiers much more cautious about committing to paying these bills, the price they are willing to pay for these homes has fallen.'In the capital, there's now a glut of flats for sale that estate agents are struggling to sell because supply outstrips demand, according to Nicholas Austin.'The first time buyers who would normally be buying flats are either struggling to find mortgages or else they’re swerving flats altogether,' he says. 'A growing number of first time buyers are skipping the starter flat altogether and saving for longer to buy a house as their first purchase because stamp duty is so punitively expensive. Fewer moves means paying less stamp duty over one’s lifetime.'Those who are still in the market for a flat can snap them up at relatively cheap prices.The price of a flat has increased just over 10 per cent since 2016, according to Zoopla. In contrast, the price of a house went up 43 per cent in the same period.A typical house now costs £327,000, which is 1.7 times more than a flat. In comparison, a typical flat now costs £193,000.And buyers may be able to negotiate discounts on those prices, too. Hamptons says that 22 per cent of flats that sold have done so following a price reduction of 10 per cent or more. That compares to 13 per cent of house sales.'As for city centres like Birmingham, Philip Jackson thinks that the market isn't likely to change until interest rates, and therefore mortgage rates, fall quite a bit further – restoring confidence for buyers and landlords alike. Best mortgage rates and how to find them Mortgage rates have shot up again due to inflation triggered by the conflict with Iran reversing hopes that the Bank of England would cut rates. This means those remortgaging or buying a home face higher costs.That makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord.This is Money's partner L&C can help you with its fee-free mortgage service.> Compare mortgage rates> Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C.This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit.You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes.If you’re ready to find your next mortgage, why not use This is Money and L&C’s online Mortgage Finder. It will search 1,000’s of deals from more than 90 different lenders to discover the best deal for you.> Find your best mortgage deal with This is Money and L&C Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.