Properties being flipped fall to lowest level since 2013

Published: 05 January 2025
The English Chronicle Desk
The English Chronicle Online

The number of properties being flipped across England and Wales has dropped to its lowest level in more than a decade, underlining how rising stamp duty and construction costs are making it increasingly difficult for investors to turn a quick profit from the housing market.

New data from estate agent Hamptons shows that just 2.3 per cent of homes sold between January and March 2025 were bought and resold within 12 months, the lowest proportion recorded since 2013. Property flipping, once a popular strategy for investors with renovation skills and spare capital, now appears to be losing much of its appeal as financial pressures mount.

Flipping a property typically involves buying a home in need of refurbishment, renovating it quickly and selling it on at a higher price. For years, the strategy attracted both seasoned investors and first-time renovators hoping to benefit from rising house prices. However, Hamptons’ findings suggest that the economics of the model have fundamentally shifted.

In the first quarter of 2025, just 7,301 homes were flipped, significantly below the ten-year quarterly average of around 10,000. Analysts say the decline reflects a combination of higher upfront taxes, rising labour and material costs, and more modest house price growth compared with the boom years following the pandemic.

While gross profits from flipping rose slightly over the past year, the longer-term picture remains bleak. Hamptons found that average gross profits increased by £6,000 year-on-year to £22,000 in early 2025. That figure, however, is a far cry from the £38,000 average profit recorded in early 2022, representing a fall of around 42 per cent in just three years.

The main reason for the shrinking margins is cost inflation. The price of construction materials has risen sharply since 2020, while labour shortages have pushed up the cost of hiring skilled tradespeople. At the same time, higher borrowing costs and increased stamp duty have further eroded returns.

Stamp duty has become one of the most significant deterrents for property flippers. A temporary stamp duty holiday came to an end in April 2025, reducing the threshold at which buyers start paying the tax from £250,000 back down to £125,000. For investors purchasing second homes, the impact has been even more pronounced.

In 2024, Labour increased the stamp duty surcharge on second and additional homes from 3 per cent to 5 per cent. As most flipped properties are classed as additional homes, investors are now facing much higher tax bills before renovation work even begins. Someone buying a second property for £500,000, for example, can expect to pay £40,000 in stamp duty, up from £27,500 under the previous system.

Hamptons estimates that stamp duty alone is now eroding as much as 21 per cent of the average gross profit on flipped homes. In many cases, the tax bill exceeds the cost of the renovation itself, fundamentally changing the risk-reward calculation for investors.

As a result, fewer flipped properties are delivering a meaningful return. Although around 80 per cent of flipped homes were sold for more than their original purchase price in the first quarter of 2025, only 66 per cent generated a net profit once all costs were taken into account.

Geography is also playing an increasingly important role. Investors who remain active in the flipping market are gravitating towards cheaper regions where property prices sit below the £125,000 stamp duty threshold. In Redcar and Cleveland, 7.6 per cent of properties sold in early 2025 were flipped, the highest proportion in England and Wales. County Durham and Hartlepool followed closely behind, with 6.6 per cent and 6.5 per cent respectively.

In contrast, London has seen flipping activity fall to particularly low levels. Just 1.5 per cent of property sales in the capital involved flipped homes, reflecting high purchase prices and substantial tax liabilities that make it difficult to achieve acceptable margins.

Industry experts say the era of easy profits from quick renovations is coming to an end. Caroline Marshall-Roberts, founder of property investment firm BuyAssociation, said flipping was still possible but had become far more specialised.

She explained that in the past, relatively inexperienced investors could buy rundown properties and achieve strong returns with limited risk. Today, she said, rising costs mean investors must be highly strategic and experienced to succeed. When average gross returns sit around £22,000 and stamp duty alone can absorb a significant share of that, even small miscalculations can wipe out profits entirely.

Marshall-Roberts added that many investors are now reconsidering their approach, opting to hold onto renovated properties as rental investments rather than selling them on immediately. With rental demand remaining strong in many parts of the country, long-term buy-and-hold strategies are increasingly seen as offering more stable and predictable returns.

The data suggests that while property flipping is unlikely to disappear altogether, it is no longer the straightforward money-making opportunity it once was. Higher taxes, elevated costs and tighter margins mean only the most experienced investors, operating in carefully chosen locations, are likely to continue finding success.