What is going on with flats for sale

[Scaredchicken]

We live in a relatively big city in Essex with good transport to London and looking to invest in small flat to let, but there are so many available for a good (for our area ) price, I am starting to think it might not be the best idea.
Is there something I am missing? Is it the service charges that's off putting for people? Some of them even look like investors are getting rid of them but genuinely can't figure out why?
I hope I am making sense.
Thanks for reading.

I think investors are selling their rental properties because of the rental reform act, which will make renting out properties much less viable as an investment.

I also think people are wising up to management companies and charges etc., so they’re less willing to rent these properties.

House prices going up and flats not so much is one reason. People stretch to buy the house instead of the starter flat in case it goes down in value and they can't afford the house. Cladding, leasehold and service charges also all contribute.

Our estate agent says leasehold flats are not selling because of service charges and fears about cladding issues. Also lots of landlords are getting out before the new Renters Reform act comes in. So flats are cheap.

I’ve been keeping an eye on the local market recently and notice that many flats on the market now are advertised for lest than they cost 10+ years ago (zone 4 leafy sw London).

Cladding and facade issues are mostly dealt with or on their way to being dealt with, in my experience, with a few exceptions where surprises are being found in the next round of FRAEWs coming through.

I think the market is slow for two main reasons - firstly the Building Safety Act has made mid and (particularly) high rise flats much more expensive to run, so service charges have gone up, and are unlikely to drop as the costs associated with meeting the requirements are not going away. Secondly, the renters reform act have made it much less appealing to be a landlord. So the combination of the two means that landlords are shedding their least profitable properties and, in a lot of cases, struggling to shift them so prices are going down.

if I were looking for an investment flat, I’d look for something purpose built, low rise (under 11m tall), without a heat network, with a decent sized sinking or reserve fund (particularly if there’s a lift). It almost certainly won’t be very pretty or have the modern luxuries that are being sold at the moment - probably 80s or 90s built, but it will be the best protected against cost increases due to legislative changes.

Fear of service charges and LL off loading rentals as difficult to make money and get problem tenants out

I wouldn't be put off, but you do need to know upfront the annual service charge, length of lease, ground rent payable (if any) and maintenance arrangements. Like @LBOCS2 says, low-rise, non-flashy, purpose built blocks are better value overall and costs will generally be controlled better with fewer flats in an estate. Buying ex-local authority is a risk too as you can be asked to contribute large sums to capital projects at short notice.

Thanks very much for all the helpful replies.
I feel a bit more insightful about it all, we will try and stretch our budget to a freehold property, probably better than a flat in the long run.

Mainly LLs selling. It’s the same issue as the employment market, extremely high taxes and poorly thought out legislation. All lovely unless you want to get employment, to employ someone, rent out your property or rent a property then it’s not so rosey. As for whether it’s a good tine to buy and invest, who knows? We do know we will have Labour until 2029 so things are likely to remain dire and probably get worse fot the cost of living and tax situation, on the other hand the LLs selling will slow to only those when mortgage period ends or tenants leave organically and rents will go through the roof. I’d go for it, but pay extra to get good insurance that will cover any costs resulting from legal action.

Putting money into ONE BTL is a very very poor investment. It's not diversified, so any issue with that ONE property could destroy 100% of your investment. LL'ing should only be performed by professional LL's who know the laws and risks inside out and have a very large portfolio of property.

Many amateur LL's are earning less than 10% pa after costs. Whereas, investors with well diversified financial portfolios have been earning 20%+ without the risk of anyone calling them in the middle of the night to fix a boiler.

Leasehold is terrible and gives have spent years saying they’ll change it and in that time freeholders have upped the ante and charging for nonsense. Little recourse. Hard to sell properties. That and landlords selling is why so many languishing on the market.

My dd just bought a flat and it has been a nightmare, lenders are really coming down hard on high ground rents etc and needing deed of variations. My son had the same 3 years ago. Bith times it took over 6 months and extension on mortgage offer to move in. I think there was a change in the law a couple of months back

I'd say a combination of renters reform bill and 200% council tax on second properties (so limited value in holiday lets). Plus check the lease length.

I have considered a similar investment in a holiday area and the sums just didn't work. With all the additional costs involved, I'd be lucky to clear 4k a year (and that is buying for cash so no mortgage involved).

I wouldn't buy a property to rent out in this market. Invest your money in ISAs or bonds if you want a good return.

If you're convinced that property is THE go-to investment for the next 5/10 years then at least just invest in a REIT or similar where you will be diversified across many properties and regions and shielded from handling all the litigation, taxes, maintenance, voids, etc. But better still just build a financial portfolio where property only forms a minority percentage. That's the best diversification of all.

Yes always far better to buy freehold. Service charges and leases have always put some people off flats, but it seems to be having an even bigger impact recently and flat prices are taking a bit of a battering.

Oversaturation
Leasehold changes
Tax changes
Changing family priorities

Also bare in mind HMO licences. Landlords may be selling up because they don't want to do the work to make the property meet the licence threshold.