Last week, finance experts suggested disillusioned buy to let investors were turning to flipping – but a new report today suggests this is not such a good move.
In the first quarter of 2025, flipped properties (homes bought and re-sold within a year) accounted for 2.3% of all transactions across England and Wales, the lowest proportion since Q1 2013. This proportion has fallen from 3.6% in Q1 last year and has halved since the latest peak in 2017.
The data comes from lettings agency Hamptons.
In number terms, there were 7,301 flipped homes sold across England and Wales in Q1 2025, with numbers now running 27% below the 10-year average of 10,000 per quarter.
The average gross profit (the difference between sale and purchase price) earned on a flipped property in England and Wales was £22,000 in the first quarter of this year. While this figure has risen by £6,000 compared to properties sold last year, slower house price growth and the shift towards flipping cheaper homes have meant that gross profits have almost halved since they last peaked at £38,000 in 2022 and remain lower than they were a decade ago.
In percentage terms, the average gross profit made by an investor who flips a home has declined from 17% in Q1 2015 to 10% in Q1 2025, primarily due to weaker house price growth.
Stamp duty is increasingly one of the largest individual costs when flipping a home, and this is eating into investors’ returns.
In 2015, an investment property could be purchased at the same SDLT rate as a home bought by an owner-occupier. In Q1 2015, the average SDLT bill paid by an investor was only £1,900.
Since then, stamp duty bills, as a consequence of changes to SDLT legislation, on flipped homes have risen by an average of 236%, reaching £6,375 on the initial purchase of those sold in Q1 2025. This increase meant that investors who sold in Q1 2025 saw an average 21% of their gross profit go towards paying stamp duty. This is more than double the proportion in 2015 (9%).
In April 2025, the nil-rate SDLT threshold fell to £125,000 from £250,000. Based on Q1 2025 sales, the average SDLT bill for an investor contemplating flipping a home today will be £11,920. Assuming no behavioural change, it means SDLT will now cost the average person flipping a home in England and Wales a record 30% of their gross profit. And this before any money has been spent on improvement works.
In the first quarter of this year, the average net profit (gross profit minus stamp duty) made on a flipped property fell to £12,000. This represents a net yield of 7% on the purchase price, before any improvement costs are taken into account.
This figure is almost double Q1 2024’s £7,000 net profit, a year when property prices were falling. Looking back a decade ago, however, returns after stamp duty costs today remain little more than half the levels achieved by investors in Q1 2015 (£28,500, which equated to a 16% net yield).
Lower returns, predominantly due to higher stamp duty costs, have reduced the proportion of profitable flipped properties. Of all the homes flipped across England and Wales during the first quarter of this year, 80% were sold for more than they were bought for; however, just 66% made a profit on resale after paying stamp duty. However, higher material and labour costs, alongside slower house price growth, have also weighed on investment appetite.
Based on today’s stamp duty rates, only 59% of these homes would have made a profit after paying SDLT, the lowest figure since 2009, when property prices were falling rapidly amid the financial crisis (chart 3). Once improvement costs are factored in, profitability is likely to fall further.
Flipping increasingly only stacks up in the Midlands and North of England, where property prices and, therefore, stamp duty costs are lower. In the first quarter of this year, 61% of flipped properties were in the Midlands, North of England or Wales, up from 50% a decade ago (before the stamp duty surcharge on second homes was first introduced).
The North East, the cheapest region in the country, remains the hotspot for flipping. Here, 4.7% of all homes sold in Q1 2025 had been bought within the previous 12 months, more than double the national average.
The three local authorities with the highest proportion of flipped properties were all located in the North East, with Redcar and Cleveland replacing Hartlepool as the most common local authority for flipping in Q1 2025. Burnley, which had been the top local authority for six of the past 10 years, ended its winning streak in Q1 2020 and has now been bumped down to fourth place.
The North East is also the only region where flipping has become more common over the last decade. This is predominantly due to the prevalence of homes costing less than £40,000.
Below this price, a home doesn’t incur any stamp duty costs, regardless of whether it is a second home or not. In the North East, 11% of homes flipped in 2025 were bought for less than £40,000, compared to the national average of 2%.
This stamp duty saving means that across England and Wales in Q1 this year, 87% of homes bought below £40,000 turned a profit after being flipped, compared to 66% for all homes at any price.
Meanwhile, the more expensive Southern regions – namely London, the South East, and the East of England – have seen the biggest declines in the share of flipped homes. London ranks bottom, with just 1.5% of homes sold this year being bought within the previous 12 months, down from 3.2% a decade ago. Here, the typical stamp duty bill was equivalent to 23% of the average gross profit. Weaker price growth in the capital has also weighed on investor returns.
Based on today’s stamp duty rates, the average investor’s return is likely to fall to 8% after paying £33,000 in stamp duty for a flipped property in London.
Just two of the top 20 local authorities for flipped homes this year were based in the South of England: Great Yarmouth in the East of England, and Torridge in the South West. Ten years ago, Great Yarmouth was 33rd and Torridge was 192nd.
Commenting Aneisha Beveridge, Head of Research at Hamptons, says: “Bigger stamp duty bills are wiping out a lot of profit from flipping. The 5% surcharge for investors, coupled with a reduction in the point at which buyers start paying stamp duty, means it’s harder than ever to make the sums stack up.
“Stamp duty bills now account for nearly a third of gross profits. And in some cases, these bills are now higher than the cost of renovating the property. This, together with rising material and labour costs and, in some places, falling house prices, makes flipping homes an increasingly tricky business.
“The second home stamp duty surcharge was introduced to tilt the market towards first-time buyers at the expense of landlords, something that it has successfully done. However, it has also multiplied the costs for those people who are refurbishing homes to a level that’s increasingly unviable. These are often empty homes which need a lot of love and are typically projects which most first-time buyers and movers have shied away from.
“These rising upfront costs have pushed investors further North, where properties can still be bought without paying any stamp duty. It’s also where more house price growth has been concentrated over the last few years. While the returns aren’t as high as with homes in the South in cash terms, higher yields and lower tax bills continue to make the North the homeland of flipping.”
This article is taken from Landlord Today