Have we made a financial mistake buying our flat rather than renting?

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We bought our flat in 2016 for £670k. It’s a one bedroom flat in a conversion with a terrace in zone 1/2 borders. We spend around £6,000 a year on service charge. Our interest rate is now 4.8%.

The total monthly cost of running and maintaining this place is £3,700 a month. On the open rental market, it would fetch around £2,800.

We have just had it valued for £650k.

We have therefore lost a significant amount of money vs if we had rented and invested our deposit in stocks and shares.

It's a perfect storm for flats - costs rising everywhere so service charges have rocketed, while Covid put people off flats because more people work from home now and they want gardens, and landlords have been selling due to this renters rights law, completely turning around supply and demand.

And the growing population - due to immigration - means flats are being built everywhere, which is further increasing the supply at a time of weakening demand.

The result?

Flats cost more to live in but are worth less.

And I can't see this changing any time soon.

If they are mortgaged, it's an unlikely scenario.

It's quite depressing, as I would prefer to live in a modern flat.
The whole area around Wandsworth Town station is full of unsellable flats with 4K+ service charges.
https://www.zoopla.co.uk/for-sale/details/68321997/

4K in London doesn’t sound anywhere near as bad as 3K in the Midlands
No heated pool opposite the local park where people are quite regularly found hanged.
It’s depressing

Very few people are going to suck up CT and SC for extended periods on empty basic flats, that is the domain of the more wealthy hanging on to large family homes that will be inherited at some point, the average landlord needs tenants with very few voids, it isn"t called borrow to let for no reason, it was aimed at people without wealth so the bankers could sell more debt.

Yes, paying mortgage debt, council tax and service charges on an empty flat isn"t realistic for most people, the idea that landlords somehow control economic reality and always "win" is extremely naive thinking.

Sometimes I think that the government is not controlling service charges on purpose - to make desperate LLs sell to councils at a discounted price and turn them into social housing. "Flats are the most common type of property in the private rented sector in England (62%) and Scotland (44%)."
But it implies the government is capable of strategic thinking, that it's proved to be untrue many times over.

More of a happy accident type scenario, but it’s a good solution and it’s to be encouraged in my opinion

Interesting point, a lot of developments billed as "executive" or some other nonsense get part sold to councils when they can"t sell all the flats meaning people with 600k mortgages end up next to drug users living off the taxpayer.

For those saying that LLs who can't sell will just put properties back on the rental market again, the new RRA will prevent that option. If it doesn't sell they are going to have to sit back and suck up the costs.

This is because if a LL decides they want to gain vacant possession in order to sell and said property doesn't sell, they can't re-let for 12 months, so it will have to sit empty.

It probably means many will sell with tenants in situ (due to difficulties gaining vacant possession in the first place). The main buyers in the market for buying a property with tenants in situ will be commercial landlords. Lloyds bank is currently one of the UK's largest private landlords with approx £2bn of properties in it's portfolio. They've also made a deal with Barratt's Redrow for Build to Rent.

www.theguardian.com/business/2025/nov/10/lloyds-the-landlord-how-the-bank-quietly-became-a-big-rental-property-player

RRA is highly unlikely to improve things for tenants over time, as these large commercial landlords won't care, but will create a monopoly of the sector.

Thanks for that information @Verysmalltimelandlord Selling with a tenant in situ in general devalues the property, is my understanding. So many landlords are going to find themselves screwed.

I don’t think many people will stick to that so-called rule. I would be inclined to rent it out and then deal with the consequences later in that scenario. Who is going to enforce it on mass? Nobody.
lloyds bank is not going around buying two bedroom terraces in Coventry
They will have a monopoly but it will be on purpose build accommodation and it will be a long time before the little 1920s Houses are removed from the market entirely but it will happen.

Well, not really if you bought the property in 1999 even if you’ve got to take a 10% hit to sell the property with the tenant situ, that’s still 90% of the 400% increase landing in your pension
Not too shabby, is it?

Given that penalties are between £25k-£40k plus rent repayment orders of up to 2 years if properties are remarketed within the 12 month restriction period (to be enforced by local authorities), it's a big financial risk and significantly cheaper to leave the property empty for 12 months or sell with tenants in situ.

In terms of gains, not everyone bought in 1999 with 400% increase in capital. For many it's much more plausible they've bought in the last 10 years than 27 years ago with much smaller returns (if any, especially if needing to take a hit due to tenants in situ, or tenants that have destroyed the property) and don't forget the CGT when sold and the higher rate stamp duty for buying your own home.

The so-called fines that they can impose on health and safety breaches are limitless in theory. They should run into the millions and yet every single day on every single workplace and every single building site it’s not in enforced.
I don’t think landlords have got very much to worry about alround.
The large banks are only going to rent to people with immaculate Credit histories and that meet the criteria in terms of full-time employment and affordability
Everybody else will be at the mercy of mum and dad landlords with a bit more flexibility and be inclined to keep their mouth shut rather than caused trouble trying to enforce this renter reform act from what I’ve seen so far.

To be enforced by local authorities, I’m sorry that one really did tickle me
They can’t even enforce fly tipping laws, with CCTV cameras pointed at the known hotspots

The large commercial landlords e.g. banks and insurance companies etc are of course only likely to rent to those with impeccable credit histories. The smaller landlords, who might have taken a chance on someone are now leaving in droves. Many will sell to larger landlords as a private individual wanting to buy their own home will not want to have to get rid of tenants first.

The act is poorly thought through and is unlikely to do anything to help the housing situation for those it is alleged to be protecting.

Whether fines are enforced or not remains to be seen, but I know I wouldn't risk a large fine and potential RRO when leaving a property empty for a year would be significantly cheaper.

When there’s huge sums of money involved, cash-strapped local authorities will do all they can to gain that money. I wouldn’t be surprised to discover they have set up (or planning to) teams / departments to look into landlords potentially breaking the law with regard to the RRA, similarly to the teams that look at deliberate deprivation of assets (but on a smaller scale).

When there's a lot of free money involved, they'll absolutely find the way. For example, there's now more parking enforcement officers in the UK than regular forces in the British Army.

I would never buy a flat unless there was a share of the freehold included.

In the reality, LLs have mortgages to pay and if absolutely unwilling to rent again, they'll drop the prices to make sales happen, that is beneficial for renters who are also FTBs.
All the panic notices have been served by now and flats are on the market.
In the future, it will be business as usual for less anxious LLs who are in the majority - they'll wait until tenants move out on their own initiative, put the property for sale, and if they can't sell within a few months time for the amount they expect, they'll just rent it again.

"Landlords were asked which, if any, types of loans or borrowing they currently have to fund their rental property. Over half (57%) of landlords had a Buy-to- Let mortgage. Landlords with five or more properties were more likely to have used each type of borrowing, with the exception of conventional mortgages. Landlords with one rental property were most likely to have used a repayment conventional mortgage

www.gov.uk/government/statistics/english-private-landlord-survey-2021-main-report/english-private-landlord-survey-2021-main-report--2

Yes, just look into LTN scheme. The councils embrace homeowners converting their absolutely random streets into LTNs and all the council has to do is to put a CCTV and start collecting fines from unaware drivers for nothing.

Don't understand why the service charge is so high, as you say it is a conversion ?

Service charges are normally high in purpose built apartments with shared facilities like gyms and pools.

Not necessarily, there's a block of flats built maybe 100 years ago nearby, the only thing they have is a lift. SCs are over 4K and owners can't sell. And similar in terms of age purpose-built block without lift - same SC. They don't even have a gardener employed by the look of it.
Because management companies can ask whatever they want basically and also because most owners are LLs who could afford not to care as they get tax deductions for SCs.
So basIcally indifference of LLs who are the majority of flat owners at least in London lead to this.

unfortunately for you 1 bed flats in London are now seriously out of favour

the situation may improve if interest rate rise significantly and a truly wealthy (or ignorant) first time buyer can no longer afford to leapfrog to a 2 bed (or house) but is still conned into buying.

that said with the legal changes in the rental market now in place from April, who knows where rental costs are going to end up