The real estate market is flooded with landlords trying to sell apartments thanks to falling profits and stricter regulations.
According to exclusive data from real estate agent Hamptons, approximately 26.7 percent of apartments currently on the market were previously rented.
This compared to 16.3 percent of apartments at the same point in 2018.
While landlords are selling other types of properties, the increase is not as drastic. Of the terraced houses, 13.1 percent of the homes for sale this year had previously been rented, compared to 10.3 percent in 2018.
Landlords selling apartments could put further pressure on the already difficult sales market.
An increasing number Owner-occupiers also want to dispose of apartments due to leasehold problems and rising service costs, but some have difficulty with this.
Philip Jackson of Maguire Jackson estate agents in Birmingham says landlord sales are one of the reasons for the current flats crisis.
In contrast to the countryside and suburbs, homes in city centers across Britain have been sold very heavily to investors.
Jackson says there are a large number of landlords who bought apartments more than a decade ago, often as a retirement investment.
“These investors have been hit in recent years by rising mortgage costs, higher annual service charges and associated property maintenance and management costs,” he says.
Additionally, they have seen “weak capital growth and rental returns.”
In a new development in the city center that is popular with investors, he says there are 32 one-bedroom apartments for sale in a development consisting of 320 apartments.
Jackson says the oversupply has been exacerbated as apartments in some blocks have only now become marketable again after the cladding problems post-Grenfell were resolved.
Philip Jackson, director of Maguire Jackson estate agents in Birmingham
The price of the apartments for sale ranges from £130,000 to £220,000. However, some sellers have to accept less. A one-bedroom apartment in the Birmingham building is being auctioned with a guide price of £85,000.
In postcode B1 in central Birmingham, 61 percent of home sellers sold at a loss in the past twelve months, according to research by an analysis agency Property information.
In London, a third of apartments currently for sale were previously rented.
Nicholas Austin, branch manager of RiverHomes in south-west London, said: ‘Landlords are now rushing for the door.’
‘The Renters Rights Act, high post-Grenfell service charges and other rising costs have made buy-to-let unprofitable for most amateur landlords.
“They’ve gotten to the point now where they’ve realized this is no longer a good investment.”
Who is in the market to buy an apartment?
The glut of apartments comes at a time when buyer interest has waned even further.
In 2016, 24 percent of apartment buyers were investors. In 2026, this has now fallen to 13.3 percent.
The holiday flat and pied-a-terre market is also declining. A 5 percent stamp duty The surcharge combined with paying double council tax means that there is only appetite among those with the deepest pockets.
David Fell, principal analyst at Hamptons, says the flats market is now mainly dependent on starters and house movers.
But due to the distrust of leasehold and the burden of service costs, these groups are also less keen on apartments.
No interest: apartments no longer attract much interest from investors and second home buyers, while starters and movers are deterred by leasehold and high costs
“The majority of new flats built between the late 1980s and around 2016 were designed for, marketed and bought by investors,” says Fell. ‘These were often amenity-rich developments that required higher rents that more than covered operating costs.
‘Nowadays, however, with fewer landlords on the market, homes are mainly purchased by owner-occupiers.
“Meanwhile, the costs of maintaining and operating these facilities have risen – and because owner-occupiers are much more careful about paying these bills, the price they are willing to pay for these homes has fallen.”
There is now a glut of apartments for sale in the capital that estate agents are struggling to sell as supply exceeds demand, according to Nicholas Austin.
“First-time buyers who would normally buy condos are having trouble finding a mortgage, or else getting rid of their condo altogether,” he says.
‘A growing number of first-time buyers are skipping the starter apartment altogether and saving longer to buy a house as a first purchase because stamp duty is so expensive. Fewer moves means you have to pay less stamp duty over your lifetime.’
Those who are still looking for an apartment can buy it at relatively cheap prices.
According to Zoopla, the price of an apartment has risen by just over 10 percent since 2016. In contrast, the price of a house rose by 43 percent in the same period.
A typical house now costs £327,000, which is 1.7 times more than a flat. By comparison, a typical apartment now costs £193,000.
And buyers may be able to negotiate discounts on those prices, too. Hamptons says 22 percent of apartments sold have done so after a price reduction of 10 percent or more. That is comparable to 13 percent of house sales.’
When it comes to city centers like Birmingham, Philip Jackson thinks the market is likely to change interest ratesand therefore mortgage interestfall even further – restoring the confidence of both buyers and landlords.
