How to tell if you are overpaying on a London flat

An asking price is not a valuation. It is a number an estate agent chose, in consultation with a seller who wants the highest figure they can get, designed to attract enquiries. Nobody in that conversation was representing you.

That matters because the asking price anchors everything that follows. Once you have seen £550,000 at the top of a listing, every subsequent number is judged against it — an offer of £520,000 starts to feel like a bargain, even if the property is only worth £490,000. Psychologists call this anchoring, and the property industry relies on it.

Here are five checks that replace the anchor with evidence.

1. Convert the asking price to price per square metre

This is the single most useful thing you can do, and it takes thirty seconds. Divide the asking price by the property's internal floor area in square metres.

Floor area is the variable that headline prices hide. Two flats advertised at the same price, on the same street, with the same number of bedrooms, can differ by twenty square metres — a difference of an entire room. Comparing on bedroom count alone tells you almost nothing.

If the listing does not state a floor area, the EPC register usually will. Every property marketed for sale in England and Wales must have a valid Energy Performance Certificate, and the certificate records total floor area. You can search the register free by postcode on the government's EPC service.

2. Benchmark against what nearby homes actually sold for

Sold prices are public. HM Land Registry publishes the price paid for every property transaction in England and Wales, and that data is the closest thing to ground truth the market has — it is what a real buyer and a real seller agreed, not what somebody hoped for.

What you want is the sold price per square metre for comparable properties within a few streets, ideally within the last eighteen months. Then compare:

• If the asking price per m² is within about 5 per cent of the local sold benchmark, it is priced fairly.
• If it is 5 to 10 per cent above, there is room to negotiate, and you should ask what justifies the premium.
• If it is more than 10 per cent above with no obvious explanation, you are being asked to overpay.

The reverse is also worth knowing. Properties priced meaningfully below the local benchmark are not automatically bargains — find out why before you get excited. Sometimes it is a motivated seller. Sometimes it is a short lease, a structural problem, or a planning application next door.

We do this calculation automatically on every valued listing. Our guide to reading sold price data covers how to do it manually if you prefer.

3. Adjust for when the comparable sold

A sale from two years ago is not directly comparable to today. Markets move, and London sub-markets move at different speeds.

The UK House Price Index, published monthly by HM Land Registry and the ONS, tracks price movement by local authority. If flats in the borough are up 4 per cent since a comparable sold, adjust that comparable up by 4 per cent before you use it. If the index is down, adjust down.

This is the step most buyers skip, and it is where a lot of bad reasoning creeps in. "The flat downstairs sold for £480,000" is only meaningful once you know when, and what has happened to prices since.

4. Check the lease before you trust any of the numbers

If you are buying a flat, the lease length changes the value materially, and it is the fastest way to turn an apparent bargain into an expensive mistake.

Below roughly 80 years remaining, extending a lease becomes significantly more expensive because of what is called marriage value, where the freeholder becomes entitled to a share of the uplift in value that the extension creates. A flat with 72 years left is not comparable to an otherwise identical flat with 120 years left, however similar the listings look.

5. Work out what is genuinely different about this property

Data gets you a benchmark. Judgement tells you whether this specific property deserves to sit above or below it. Things that genuinely justify a premium:

• Outside space, particularly a private garden
• Top-floor or dual-aspect light, or an unusually quiet position
• Recent, competent renovation — as opposed to cosmetic staging
• Share of freehold rather than a short lease
• A genuinely better position within the same postcode: park-side rather than main-road

Things that are dressed up as premiums but usually are not: new kitchen appliances, fresh paint, staged furniture, "scope to extend" without planning permission in place, and proximity to a station that is actually a nineteen-minute walk.

Putting it together

You are not trying to arrive at a single perfect number. You are trying to replace a marketing figure with a defensible range, so that when you make an offer you know what you are doing and can explain it.

That last part matters more than buyers expect. An offer backed by "three comparable flats on this street sold at an average of £7,900 per square metre in the last year, and this one is being marketed at £8,700" is much harder for an agent to dismiss than an offer that is simply lower.

Frequently asked questions