Approximately 87% of leasehold flats listed for sale in England and Wales in Q4 2025 remained unsold after six months, marking the highest level in five years. This contrasts sharply with 74% of all freehold homes and 69% of two-bedroom freehold houses unsold in the same period. London saw the highest share of unsold flats at 87%, followed by the South-East at 85% and the East of England at 84%, with a national average of 80.5%. This market stagnation is partly attributed to wider housing market pressures like higher borrowing costs and political uncertainty, but leasehold flats face additional resistance from buyers.
Buyers are increasingly deterred by the costs and risks associated with leasehold ownership, including average annual service charges of £1,900 (rising to £2,500 in London) and ground rents between £150 and £250. Richard Donnell, executive director at Zoopla, notes that negativity towards flats has intensified since the Grenfell Tower fire, as buyers are more acutely aware of the costs and risks, especially concerning cladding issues.
Another significant factor is the mismatch between buyer and seller expectations. In London, where flats are a primary entry point for first-time buyers, investor-owned flats are often priced above typical first-time buyer budgets (e.g., £450,000 versus a £425,000 budget). Landlords, often with no urgent need to sell, tend to be more price-sensitive than owner-occupiers, and nearly half of those attempting to sell ultimately return to the rental market if their asking price isn't met. Former rental flats in London are marketed at an average of £54,000, or 13%, above the average sale price for leasehold flats in Q4 2025.
Mortgage lending rules have also become stricter, further excluding some potential buyers, while surveyors are increasingly "down valuing" flats, creating additional hurdles. Although the government is pursuing leasehold reform, including plans for commonhold to become the default for new flats and simplified lease extensions, these changes are not expected to fully address the current issues for existing leaseholders, who remain concerned about rising costs and market uncertainty. A ban on new leasehold properties in England and Wales is not expected until after the next election.
