Flipping makes a comeback with big profits made by investors

The mixture of the stamp duty holiday and generally fast-rising house prices has led to a resurgence of flipping.

Data released this morning by Hamptons International shows that across England and Wales during 2020 the proportion of homes sold twice in a 12-month period has reached the highest level since 2008.  

The agency claims that so far this year 2.5 per cent of all homes sold have been flipped, a figure which is likely to equate to around 23,000 transactions by the end of the year. 

This may prove to be the largest number of homes flipped since 2007.

Hamptons says that despite the pandemic, 2020’s figure is likely to surpass 2019 both in terms of the number of homes flipped and the profit made.  

In 2019, 2.4 per cent of homes sold had been bought inside 12 months, or 20,857 properties. This year the average difference between the purchase price and sale price is £40,995, the highest figure on record and up from £29,685 in 2019.  

This is equivalent to an average gross profit of 26 per cent.

The rise in gross profit has been driven up by a move away from flats - a trend seen widely in both the sales and lettings markets as people search for more home space.  

Just five per cent of flipped homes bought and sold since the housing market reopened in May were flats, down from 20 per cent in 2019.  

In recent times flipping has increasingly been concentrated across Northern England and Hamptons says that so far in 2020, six of the top 10 places are located in the North East or North West of England.  

It has been two years since anywhere in Southern England made it into the top 10 - the agency claims this is a reflection of the weakness of the market and the amount of stamp duty payable.  

Burnley - where homes are spectacularly inexpensive - has seen more homes flipped in 2020 than in any other local authority in England and Wales.  

Some 8.2 per cent of all homes sold in the town during 2020 so far had been bought within the preceding 12 months and this is the sixth year in a row that Burnley has topped the list in England and Wales.  

No fewer than 81 per cent of the homes flipped in Burnley this year were bought for £40,000 or less, with buyers not liable to pay either general or investor stamp duty.  

Ninety three per cent of these purchases were terraced houses, bought for an average price of £38,000.  

For all flipped homes in Burnley, the average difference between the purchase and sale price was £20,643, or 44 per cent.

“Flippers play an important role in the housing market by improving housing stock and taking on projects other buyers often won’t touch. Since the market weakened following the financial crash of 2007, the number of flipped houses dwindled. However in recent times their numbers have started to recover” explains Aneisha Beveridge, head of research at Hamptons International.

“But the introduction of the three per cent investor stamp duty surcharge has served as a cap, with flippers increasingly targeting cheaper areas where they don’t have to pay stamp duty.  At the same time, tightening yields and increased regulation have pushed some landlords away from long-term ownership towards buying, refurbishing and selling on” she adds.

“Burnley has cemented itself in the top spot for the last six years as it’s one of the few places where investors can purchase a home without paying any stamp duty. And while the current stamp duty holiday will see flippers across the country save money, its full impact won’t be felt until early next year when these homes are likely to return to the market for sale.”