This is the lowest of ‘flipped’ home sales since 2013 and 27% under the 10-year average for that period of the year, according to Hamptons house pricing index.
There were 7,301 flipped sales in Q1, with the difference between the sale and purchase price made on the property amounting to £22,000.
This has risen by £6,000 compared to last year as homeowners opted to ‘flip’ cheaper properties and house prices dropped, causing the profits to plummet since its 2022 peak of £38,000.
Meanwhile, stamp duty changes in April, where the threshold of the charge halved to £125,000 for residential purchases and fell to £300,000 for first-time buyers, will also impact the profits of sellers.
Bills for stamp duty have risen by 236% with an average of 21% gross profit for investors covering the costs.
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On average, the average net profit of sales on a flipped property dropped to £12,000, the estate agent’s data found.
‘Bigger stamp duty bills are wiping out profit’
Aneisha Beveridge, head of research at Hamptons, said: “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.
Beveridge added: “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.”
