Bag yourself a bargain flat: As prices are slashed by up to 35%, how to tell a top deal from a money pit

Homeowners have fallen out of love with flats. Thousands are selling at double-digit losses, and countless horror stories are pushing would-be buyers to steer well clear.

Prices have been steadily falling in recent years. Average flat prices are lower than they were four years ago – since August 2022, the average flat price has fallen by 3.71 per cent from £200,246 to £192,826. 

In London, the flat market has been in freefall. In the past four years, the average has dropped by 11 per cent from £594,135 to £529,040.

But prices are now tumbling at an even faster rate. Flats were once a popular stepping stone for young homebuyers to get on to the property ladder.

Now first-time buyers are avoiding them and going straight from renting to buying a house. 

Two in three first-time buyer mortgage customers bought a house in 2025 rather than a flat, according to Santander.

Flats were also once the popular choice for landlords. But buy-to-let is no longer the gravy train it once was. Many flat owners are trapped in unsellable apartments, facing sky-high service charges, ground rents and hidden insurance commissions.

But some property experts argue that the drastic price fall means there could be a unique chance to pick up a bargain. Here’s how to spot a steal – and avoid buying an unsellable money pit.

Flats look cheap

The good news is that there are several key indicators that flat prices should begin to pick up in the next few years.

Flats look cheap from a historical perspective, experts say. Ten years ago, flats were more expensive than terraced houses. The average price of a flat was £155,726 in December 2016, compared to £153,491 for a terraced house. A decade later and the average price of a flat is £192,826 – £36,623 cheaper than a terraced house, which is valued at £229,449.

Rob Dix, of property data group Property Hub, says while the past decade has been hard on flat owners, it does not mean that flats will be a bad investment in the future.

He says: ‘Circumstances have been bad for flats so they haven’t had the growth.’

However, he says he suspects the relationship between house prices and flat prices could revert once more – with flats becoming more expensive again in future.

James Nightingall, of HomeFinder AI, says flats in the capital look good value – even from a buy-to-let perspective. He says: ‘Many are trading at a discount to houses and previous price peaks, creating opportunities for long-term investors.’

The best bargains will be those that are well-located, for example, those near good transport links or close to the centre of London. These can be especially lucrative for buy-to-let investors as there should be strong rental demand and solid returns on investment, Nightingall says.

One example is a one-bedroom flat in Bayswater, which has had its asking price cut four times since October 2024 – from £425,000 to £280,000. Another close to Hyde Park is listed at £475,950 having been £625,000 in July.

A property that has had numerous price reductions may look like a bargain but it’s important to consider why it’s not selling.

In many cases, the seller or estate agent has priced the property too high in the first place or there could be something wrong with the flat. In this case, the lower asking price may reflect the true price rather than a good deal.

However, multiple price reductions can sometimes present an opportunity. This is because buyers tend to be wary of homes that are attracting no interest. A savvy buyer could use this to their advantage. First, research how much similar flats have been selling for in the area and find out about the seller’s situation – most importantly, how desperate they are to sell. You may be able to bag a good price.

Leasehold reform

Perhaps the biggest deterrent is that flats, new-build or not, are often leasehold, which comes with some off-putting strings attached. This includes expensive ground rents and service charges.

But this may not be as big a stumbling block in the future. Leaseholders are hoping proposed reforms will make it cheaper and easier for them to extend their leases or club together with neighbours to buy the freehold.

Nightingall says: ‘Potential reforms could help restore confidence in leasehold flats.’

This could prompt a much-needed revival of the market and instil more confidence for buyers, pushing prices higher again.

Ground rent capped

Ground rents have been a major factor in depressing flat prices.

Many leasehold flat owners have ground rents they pay to their freeholder in return for no services given. While they have been outlawed for all new leaseholds, many still endure these costs.

Some ground rents increase in line with the retail price index inflation rate and change every ten or 20 years. This means someone who bought a flat with a £600 annual ground rent in 2016 would see their ground rent rise to £950 this year. Other ground rents double every ten, 20 or 25 years.

Earlier this year, the Government announced plans to cap all ground rents at £250 a year, falling to virtually zero in 40 years.

Even so, any prospective buyers should be wary of flats where the ground rent is above £250 a year, Dix says.

‘This should make you cautious, and doubling ground rents are a massive red flag.’

Service charges

Many leaseholders, especially those in apartment blocks, pay annual service charges towards the upkeep of the building.

Service charges have increased by 41 per cent between 2019 and 2024, with the average leaseholder paying £3,634 per annum.

Service charges vary greatly, depending on the type, size and location of the property.

But as a general rule, service charges between £2.50 and £4 per square foot are typical in London, and £1.50 to £2.50 regionally elsewhere, says Dix.

He adds: ‘Anything exceeding 1 per cent of the property’s value per year would generally be considered high – unless the building offers exceptional amenities such as 24-hour concierge services, gyms or communal facilities. The key is to make sure you understand exactly what’s covered.’

Check lease length

For many who want to buy a flat, leasehold is a fact of life.

Despite all the criticism, leasehold flats are not automatically bad, according to Dix, they just need more scrutiny.

It’s important buyers fully understand what they’re getting into before they pile in their life savings. ‘First, check the lease length carefully,’ he says. ‘Anything under 80 years gets expensive to extend.

‘We recommend buying with a term of at least 100 years remaining, this will give you 20 years until it starts to become an issue for lending purposes.’

How about new builds?

For those buying a new build, there won’t be a service charge history to look at, which means buyers are reliant on the estimate the developer provides – which may not be accurate.

In this case, the best thing to do is research the developer and management company to see how well they manage other projects, according to Dix.

‘The positive with new build flats is you’ll get a new lease of typically at least 150 years, so the length will never become an issue.’