"Tightening yields and increased regulation have pushed some landlords away from long-term ownership towards buying, refurbishing and selling on."
Its data shows that 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 the pandemic, Hamptons predicts that 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% 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%.
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 housing market reopened in May were flats, down from 20% in 2019. In 2019, flippers in England and Wales spent a total of £4.4bn buying homes, collectively bringing in £5.1bn after selling them last year.
The data also shows that Burnley has seen more homes flipped in 2020 than in any other local authority in England and Wales. 8.2% of all homes sold in the town during 2020 so far had been bought within the preceding 12 months. It is the sixth year in a row that Burnley has topped the list in England and Wales. The last time Burnley failed to take top spot was in 2014 when it was pipped by the City of London and finished in second place.
81% 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. 93% 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 (i.e. gross profit) was £20,643, or 44%. Just over two-thirds (67%) of these homes subsequently sold for more than £40,000, with the new buyer liable to pay stamp duty.
In recent times flipping has increasingly been concentrated across Northern England. 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, a reflection of the weakness of the market and the amount of stamp duty payable. In 2018 the London Borough of Hackney saw the tenth largest proportion of homes flipped nationally.
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.”
