Why are London’s house sellers losing money?
London’s housing market is known for offering vast mansions and leafy avenues to wealthy buyers from across the world. So why are more sellers in the capital suffering losses than anywhere in the country?
It is London’s most affluent and sought-after locations where the profitability of home-selling is taking the biggest hit, with Chelsea and Kensington, Camden, and Hammersmith and Fulham – along with outlier Tower Hamlets – among the areas where the most sellers suffered losses in 2025.
Analysis of Land Registry data by estate agency Hamptons showed 14.8 per cent of London’s property sellers made a loss in 2025, signalling the capital’s housing market is running out of steam.
This is almost double the national average of 8.7 per cent, and marks a more-than five per cent increase in this figure since 2019.
In October, London house prices slumped by more than two per cent year on year to an average of £547,000 as Budget chaos took its toll on a volatile housing market.
One in five flats sold at a loss
The sharp increase in the number of London sellers facing losses is driven by a collapse in flat prices, with 22 per cent of them selling at a loss in 2025 while only 3.5 per cent of houses did the same.
The high concentration of flats in Tower Hamlets – where the highest proportion of property sales (28.2 per cent) were made at a loss – is the reason property is so unprofitable in this borough, according to Aneisha Beveridge, head of research at Hamptons.
While house and flat markets have both been affected by the 2014 overhaul to stamp duty, reduced demand from investors and rising interest rates, Beveridge says, the value of flats has also suffered from safety regulations introduced since the Grenfell tower fire in 2017.
Many of the homes being sold now were bought either during the spike in house prices which occurred around a decade ago or in the price boom during the Covid pandemic, and so are bound to make a loss, Beveridge and other experts told Morning Wire.
“Ultimately it will start reversing when we see some stronger price growth in London, and we don’t really know when that’s going to happen, in all honesty,” she said.
Stamp duty reforms a key cause
Though the pandemic delivered an additional spike in property prices, the 2014 changes to stamp duty are the main cause of today’s housing market crisis, according to James Holroyd, a partner at luxury property advisors Property Vision.
The reforms to stamp duty, introduced under Conservative chancellor George Osborne, changed the tax from a single rate to a banding of rates determined by purchase price.
“The problem is that we’ve had 12 years of political instability and just general chaos” sustained by Brexit, the pandemic, and the uncertainty leading up to last year’s Budget, Holroyd told Morning Wire.
“The stamp duty is a massive punitive issue, and the UK has got more people leaving it than it does coming in so it’s hard to see why prices are going to get better anytime soon.”
Wealthy foreigners are fleeing the country to escape the government’s non-dom crackdown, and this cohort made up two in every three super-prime property sales in London last year.
Help to Buy boosted young buyers but spiked prices
Charlie Lamdin, founder of housing marketplace BestAgent, said leasehold flats in purpose-built blocks and high-value “super prime” properties are the two categories worst hit by this slump in sales value.
The end to the Help to Buy scheme, which offered a 40 per cent “equity loan” to first-time buyers in London and lasted between 2013 and 2022, is the reason for the “cliff-edge” drop in the value of flats in the capital, Lamdin claimed.
He said the cheap loans pushed up the growth of property prices and its termination has caused a sudden drop in housebuilding – with the Daily Mail reporting a 72 per cent drop in London between the last two financial years.
While some property experts are calling for the government to introduce a similar scheme, Lamdin says a new loan-to-buy program would exacerbate the problem.
He told Morning Wire: “It’s literally like saying to someone who’s trying to go cold turkey from an addiction problem: ‘Here you are, have some more’.
“When you artificially intervene in a marketplace with unsustainable, temporary stimulation, it cannot be anything other than artificial manipulation of a market.”
Could US buyers rescue London’s property market?
American housebuyers opting to move to London from the US could offer a boon to the capital’s luxury market, in what has been dubbed the Trump effect.
Trump’s move to ban institutional companies from buying single-family homes in the US could cause American firms to step up their investment in the UK housing market, the Guardian has reported.
While American buyers remain a smaller segment of the overall market compared to European and Middle Eastern buyers, Beveridge said the recent growth in build-to-rent sales is being driven by investors across the pond.
“I suspect that’s what we could see a little bit more of, should Trump bring in those rules,” she said.
A Ministry of Housing, Communities and Local Government spokesperson said: “Help to Buy was introduced and closed under the previous government and an evaluation of the scheme is ongoing, including its impact on house prices.”
“More widely, we’ve unveiled new emergency measures to tackle the housebuilding crisis in London, working closely with the Mayor to unlock stalled sites and build more affordable homes across the capital.”