Almost 40% of London Flats Resold After Five to Ten Years Sold at a Loss. What Happens to Your Next-Home Deposit?

New analysis from e.surv finds that 39.5% of London flats resold in 2025/26 after five to ten years of ownership changed hands below their previous recorded purchase price. For an owner planning to move, a disappointing sale price can become a much more immediate problem: a smaller deposit for the next property.

Many moving plans begin with a familiar assumption. The current home will release a certain amount of equity, that money will fund the next deposit, and a mortgage will cover the difference. If the first figure changes, the rest of the plan changes with it.

A flat expected to sell for £900,000 may attract realistic offers nearer £800,000. The owner’s income could be exactly as strong as before. Their mortgage payments might remain comfortable. Yet the cash available for the next purchase could be £100,000 lower than expected.

That can affect the target purchase price, the amount of new borrowing, the loan-to-value band and the monthly cost. It deserves a fresh funding assessment before the owner commits to another property.

What the Research Measures

The October 2026 report uses repeat-sales analysis. For flats held for five to ten years, the corresponding loss rate across Great Britain was 26.7%, with flats recording higher loss rates than houses in every region.

Separately, the wider index recorded London prices down 2.3% annually in September. That regional measure should not be applied as a valuation adjustment to an individual flat.

For a borrower, the useful response is to examine their own property and mortgage position. The question is how much equity can support the next decision.

A £100,000 Price Difference Can Remove Far More Than You Expect From the Deposit

Consider a hypothetical owner who bought a London flat for £900,000. They now have a £600,000 mortgage balance and have been planning their move on the assumption that the flat will still sell for £900,000.

Allowing £20,000 for illustrative selling costs would leave £280,000. At an £800,000 sale price, with the same mortgage balance and assumed costs, the cash released falls to £180,000.

The sale price is about 11% lower than expected. The cash available after those deductions is almost 36% lower. The mortgage must still be repaid, so the reduction falls directly on the owner’s remaining equity.

This example excludes any early repayment charge and tax liability. Purchase taxes, legal costs and other costs of the next home also need separate funding. The mortgage redemption figure and actual transaction costs should replace these assumptions before a budget is agreed.

Even so, the basic effect is clear. A modest-looking change in the property price can make a much larger difference to the money available for a move.

You Can Sell at a Loss and Still Have Positive Equity

In the example, the owner sells below the original purchase price but still has £200,000 of equity before costs. That is different from negative equity, where the property’s value is below the outstanding mortgage.

The distinction matters because it changes the financing conversation. An owner with positive equity may still be able to move or refinance, although with a smaller deposit or less capacity to raise capital. An owner whose debt exceeds the sale proceeds faces a shortfall that must be addressed with the lender.

There is a third figure to keep separate: the original deposit. Years of capital repayments may have reduced the loan, while fees and previous capital raising may have changed the balance. Comparing today’s price only with the purchase price does not reveal today’s equity.

Start with the current mortgage statement and realistic valuation evidence. Those are the figures that determine the present funding position.

The Next Home May Require More Debt at a Higher Loan-to-Value

Suppose the owner is considering a £1.2m purchase. Using the illustrative £280,000 sale proceeds entirely as the deposit would leave a £920,000 mortgage requirement. With £180,000 available, the requirement becomes £1.02m.

Before allowing for purchase costs or other savings, the new loan-to-value rises from approximately 76.7% to 85%. That may change which products and lenders can accommodate the transaction.

The client now needs the lender to approve an additional £100,000. Their income and expenditure must support the larger loan, while the new property, loan size and deposit must fit the lender’s criteria.

There may be several ways forward: a lower purchase price, additional savings, a different borrowing structure or a revised timetable. Each has consequences. Using investments or family funds, for example, requires consideration of ownership, accessibility and the client’s wider plans.

A Lower Valuation Can Also Change a Remortgage

The same issue applies to an owner staying put. A £600,000 mortgage against a £900,000 valuation represents about 66.7% loan-to-value. Against £800,000, it represents 75%.

The balance has not increased. The security supporting it has fallen in value. That can alter the product range and reduce the scope for additional borrowing.

An estate agent’s market appraisal, an asking price and a lender’s valuation serve different purposes. An owner should avoid assuming that the figure used in an earlier mortgage assessment will necessarily be accepted again.

An existing lender’s product transfer may deserve comparison with a remortgage elsewhere. Its process and available terms depend on that lender. The important task is to establish the viable options before the existing product expires.

Porting May Protect a Rate, but It Cannot Replace Missing Equity

Owners with an attractive existing mortgage often ask whether they can take it to the next home. Where the product is portable and the lender approves the transaction, that may preserve useful terms on eligible borrowing.

It does not restore the £100,000 missing from the sale proceeds. The buyer still needs to fund the purchase, and additional borrowing may come from a different product range at a different rate.

Nationwide’s published porting criteria, for example, distinguish the existing product from additional borrowing and explain that charges may apply where part of the balance is repaid rather than ported. Other lenders have their own arrangements.

A sensible comparison therefore includes porting, additional borrowing and a replacement mortgage. It should show the combined monthly payment, fees, any early repayment charge and the practical conditions for completing the move.

Keeping the Flat Requires Its Own Funding Plan

An owner facing a disappointing offer may decide to retain the flat and let it. That can be worth exploring, but it creates two connected financing questions: how to fund the next home and whether the retained property will work as a rental.

Capital tied up in the flat remains tied up unless suitable finance releases some of it. A lower valuation can limit that release. The achievable rent must also support the proposed borrowing under the relevant lender’s assessment.

The rental calculation should include service charges, maintenance, management, insurance, periods without rent and tax. A healthy gross rent can leave considerably less cash after those costs and the mortgage.

Retaining the flat may also change the tax and transaction costs of the next purchase. These need advice from the appropriate professional. Letting requires lender permission or suitable replacement finance; it should not be assumed to be permitted under the existing mortgage.

For Landlords, Rent and Capital Value Need Separate Assessments

A landlord’s flat can produce reliable rent while releasing less cash on sale than expected. Equally, a property with positive equity may produce weak net income once debt and running costs are included.

Those situations call for different decisions. A lower value may affect refinancing capacity, while a higher mortgage rate or service charge may affect the cash generated each month.

A portfolio review should therefore show each flat’s current value, mortgage balance, rent, running costs and renewal date. It can then compare retaining, refinancing or selling within the wider strategy.

Improvements also need a realistic appraisal. Spending £30,000 does not guarantee an equivalent increase in value or rent. The scope of work, evidence of demand and funding cost should support the decision.

Willow’s buy-to-let mortgage review can establish what suitable borrowing supports. Investment and tax decisions should be considered with the relevant advisers.

The Building Matters as Much as the Flat

Two similarly priced apartments can present different lending questions. Lease terms, building condition, service charges and relevant building-safety documentation can influence the assessment of the property.

Nationwide’s leasehold criteria explicitly consider marketability and the effect of lease terms on valuation. Meeting a minimum lease requirement does not necessarily settle every property issue.

For an owner, this means gathering the information early: the remaining lease, current charges, known major works and the documents required for the building. The lender and conveyancer can then assess the actual property.

A mortgage adviser cannot remove a legal or building defect. They can identify lending requirements and help avoid a funding plan that relies on assumptions still needing verification.

How Willow Private Finance Can Help

Willow can review the equity and borrowing position using current valuation evidence, the mortgage redemption amount, likely transaction costs and the client’s next objective.

For a home mover, that means comparing an achievable purchase budget, porting where relevant and suitable new borrowing. For an investor, it means assessing refinancing and capital release alongside rental income and portfolio commitments.

The review can also test a lower sale-price scenario, so the client understands how much room remains if negotiations change the proceeds.

Your next-home budget should reflect the cash your current property can realistically contribute. Establishing that figure early gives you a clearer choice of properties and a firmer basis for arranging the mortgage.