Buying and selling a home in quick succession, or flipping as it’s often referred to, began in earnest in the 2000s. But as house price growth stalled following the global financial crash, so did the number of flippers. However in recent times, their numbers have started to recover.
The introduction of the 3% investor stamp duty surcharge in 2016 has served as a cap, with flippers increasingly targeting cheaper areas where they don’t have to pay stamp duty. But at the same time, tightening yields and increased regulation have pushed some landlords away from long-term ownership towards buying, refurbishing and selling on. As a result, the proportion of homes flipped across England and Wales is now at the highest level since 2008.
So far this year 2.5% of homes sold have been flipped within 12 months, a figure which is likely to equate to around 23,000 transactions by the end of the year. Despite coronavirus, more homes will be flipped with greater profits made this year than last.
In 2019, 2.4% 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 rose to £40,995, the highest figure on record and up from £29,685 in 2019. This is equivalent to an average gross profit of 26%.
The rise in gross profit has been driven up by a move away from flats. Just 5% of flipped homes bought and sold since the market reopened in May were flats, down from 20% in 2019. Last year flippers in England and Wales spent a total of £4.4bn buying homes, collectively bringing in £5.1bn after selling them last year. Flippers who typically, buy, renovate and sell on, play an important role in the housing market; not only do they improve the quality of housing stock in a local market, but they bring empty homes back into use too.