Brokers on the market trend they are seeing
It’s long been a popular strategy for developers, but property flipping seems to have had its day – at least in the current market. According to data from property business Hamptons, the practice of buying a house or a flat at a lower price and then reselling for more within a relatively short period of time, has hit its lowest level since 2013.
In the first quarter of 2025, the proportion of homes flipped fell to 2.3% across England & Wales, down from 3.6% in Q1 2024. This was the lowest proportion in 12 years. There were 7,301 flipped homes sold in Q1 2025, 27% below the 10-year Q1 average.
Furthermore, Hamptons – a leading residential estate agent and property services company, operating in London and the south of the UK - reports that for someone considering flipping a home today, Stamp Duty will now account for 30% of gross profit - £11,920 on average, up from 10% a decade ago, before any money has been spent on improvement works.
While 80% of flipped homes were sold for a higher price in Q1 2025, only 66% made a profit after Stamp Duty costs were added. 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. The average gross profit – the difference between sale and purchase price - earned on a flipped property was £22,000.
Dan Gracie (pictured left), specialist lending director at Panthera Finance LLP, sees very few investors and developers flipping properties now, especially part-time or hobby investors. “Some have told me that there’s not enough profit in it and most seem to be exiting their development finance loans with long-term BTL remortgages now, building their own rental portfolios,” Gracie commented. “Even that doesn’t always present a great profit margin and so many are increasing that margin by finding standard houses that can either be split into two separate dwellings or extended and restructured as HMOs, thus generating a higher level of eventual rental income. This can also increase the gross development value and enable some capital to be released from the remortgage.
“Once a developer finds a formula that works, I tend to see them back within a few months, using capital raised on the exit remortgage to purchase another, similar-looking project and start again. There are a few good lenders who can handle the original development loan and the exit remortgage, which is great for my regular developers who like the simplicity of using one lender at both ends and the confidence of knowing a lender has an ongoing appetite to lend to them.
Joela Jenvey (pictured second from left), mortgage and protection adviser at Nurture FS, reports a noticeable slowdown in property flipping among her firm’s investor clients over the past 12 months. “The viability of short-term renovation projects has been heavily impacted by a combination of tax changes, rising costs, and market conditions,” Jenvey commented. “The upcoming April 2025 Stamp Duty changes, particularly the tightening around reliefs and the additional surcharge costs, created a push to complete transactions quickly. But now that this surge has passed, we’re seeing a natural dip in activity as the market settles and investors reassess.
“At the same time, the overall cost of flipping has risen significantly. Income tax implications on profits, alongside soaring costs of materials and tradespeople, are squeezing margins to the point where many deals no longer stack up. The market is also shifting. We’re in the midst of a readjustment towards a more defined buyers’ market. In key second home and holiday let hotspots, a wave of properties is coming to market, often driven by local authority council tax changes targeting second homes. This increase in supply, coupled with softening prices, means that even well-planned flips risk having any capital gain wiped out by market correction. As a result, savvy investors and developers are largely adopting a ‘wait and see’ approach.” She added: “Flipping isn’t necessarily dead, but for the moment, it’s on pause. Many are holding off until the market stabilises and the risk-to-reward ratio is more favourable.”
Gerard Boon (pictured second from right), managing director of Boon Brokers, concurs. "We have seen a decline in the number of clients looking to flip properties,” he noted. “The market is currently unattractive for this sort of investment, when there are far more liquid investment opportunities elsewhere that seem likely to generate better returns.
“The decline is likely to be due to increased costs of the transaction. Not only are mortgage interest rates and property taxes higher now than they were a few years ago, but the product fees attached to mortgage products have also increased with most providers. Product fees can be over £2,000 with some lenders. All of these costs make flipping unattractive, as the profit margin is likely to be slim, if not in the negative. In addition, a significant benefit of flipping properties previously was capital appreciation. Many developers would see their properties increase in value due to high inflation, regardless of whether they renovated the property or not. As property inflation has fallen in recent times, the capital appreciation benefit of flipping properties has also declined.”
Boon added: “Sadly, there does not seem to be any sign that the Labour Government will help grow the market for those flipping properties. Therefore, I think it is unlikely that this market will improve over the short-term.”
Ben Perks (pictured right), managing director of Orchard Financial Advisers, has also seen a tail off in property flipping, and what he describes as ‘the lighter touch tart and turn’ property purchases. “I don’t think this is due to a lending issue,” Perks suggested. “Bridging finance is as competitive as it’s ever been in terms of rate. The rates have hardly moved over the last five years, polar opposite to the fluctuating rates we see in the normal mortgage market. Yes, bridging is expensive and fees may have edged up slightly, but when talking purely about a property flip you build those costs into your margins before you proceed and ensure the re-sale value of the property leaves the profit you desire.”
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How the cost of materials and labour is impacting property flipping
The biggest issue is the cost of materials and labour, acknowledges Perks. “These have sky-rocketed over the last five years and if you’re not skilled enough to do the required work yourself, it’s going to cost you a pretty penny to get someone to do it,” he said. “Not to mention the availability of good builders, who are booked up a year in advance. Also, the rise in influence of the EPC rating and the possible impending minimum requirements that the Government are imposing in the near future, means that to attract landlord purchasers as well as residential, you need to renovate to a higher quality, which obviously increases the spend required.”
He concluded: “Property flipping is not dead, but at the moment it’s a game for experienced developers with contacts and deep pockets. It’s definitely not for the faint hearted. Borrowers’ priorities have altered and are now firmly on the roof over their heads. Whilst struggling to pay your own bills, you’re probably not thinking about venturing into property development.”
Mortgage adviser Rachel Lummis (pictured inset, above), from Xpress Mortgages, notes, too, that there is less appetite. “What we are seeing is plenty of purchases on properties that do require work, with the exit not being to sell the property, but to keep it as a buy-to-let investment on a long term five-year fixed rate deal,” Lummis commented, “buying a property and adding value to it at the outset, with a view to pulling out capital once the works are done, to go again. This is a typical way that landlords build their portfolios over time and a model that’s been used for many years and remains popular. I’m not surprised that flipping property has reached its lowest level since 2013. I think we need to see lower rates before this improves. With the extra costs comes that added risk that the numbers wont stack up.”
Meanwhile, Emily Franks (pictured inset, above), director of Emily’s Mortgage Services, summed up: “Property flipping has been non-existent since I became a broker during COVID. Cost materials rising, cost of being a landlord rising, tax implications when buying and selling – it just isn’t as lucrative as it once was and the ones that are doing it are buying at auction where they really can find the best deals. I would say there are fewer inexperienced buyers taking a punt on making a profit - people just aren’t prepared to take the risk now.”
