A flipped property is when a property is bought and sold within 12 months. Properties are often flipped as investors look to redevelop properties in order to generate a return. The average profit in 2020 from flipped homes in England and Wales is £40,995 an increase from £29,685 in 2019. This increase in profitability is because of a switch made by investors from flats to more houses. After the first lockdown ended and the housing market reopened, the percentage of flats being flipped reduced from 20% in 2019 to 5% now. Investors were quick to respond to changes in demand from buyers that now wanted larger properties for home-working and with outside spaces.
Properties in the north continue to see the greatest number of homes flipped, with six of the top 10 places for flipping located in the north. It has been two years since properties in the south of England entered the top 10 most flipped locations and reflects the effect of stamp duty on profitability on more expensive properties in the south (even allowing for the stamp duty holiday).
Commenting Aneisha Beveridge, head of research at Hamptons International, said:
“Flipping generally involves buying, renovating and selling a home over a short period of time, in most cases for a profit. 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. But the introduction of the 3% 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.
“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. Given investors in more expensive areas will see larger stamp duty savings, there is potential for Burnley to be knocked off the top spot before too long.”
