Flipping homes is falling out of favour as stamp duty surcharges and tighter lending criteria take their toll
Introduced in 1694, you’d have got long odds on people still lamenting stamp duty in 2025. But here we are – and it’s a situation that has many brokers shaking their heads in frustration.
“Stamp duty was only supposed to be a temporary tax in the 17th century,” said Luke Egan, of Truffle Specialist Finance. “Yet, it’s still causing plenty of issues hundreds of years later.”
Egan’s frustration is shared by many in the property world, where Chancellor Rachel Reeves’s decision to let a stamp duty discount lapse, while raising the surcharge on second homes, has drained profits from the once-fashionable business of flipping.
The Conservative government introduced a temporary stamp duty discount in 2022 for first-time buyers in England and Northern Ireland, covering the first £425,000 of house purchase prices. But this was not continued and this band for first-time buyers now only applies to the first £300,000 of house purchases, with other buyers seeing a reduction from £250,000 to £125,000.
According to new analysis by Hamptons, the share of homes bought and sold within a year has fallen to just 2.3 per cent, the lowest since 2013. The average stamp duty bill on such sales has more than tripled over the past decade to £6,375, wiping out a fifth of profits.
Falling Returns
For professional investors, the sums are tightening. Hamptons found the average profit on a flipped home was £22,000 in the first quarter of 2025, £6,000 higher than a year earlier but far below the £38,000 peak of 2022. Only two in three flipped homes now turn a profit.
Aneisha Beveridge, head of research at Hamptons, said: “Bigger stamp duty bills are wiping out a lot of profit from flipping. In some cases, these bills are now higher than the cost of renovating the property.” Rising material and labour costs, she added, have “multiplied the costs for those people who are refurbishing homes to a level that’s increasingly unviable”.
The tax has shifted the geography of flipping. More than 60 per cent of such sales are now in the Midlands, the North and Wales, up from half a decade ago. “While the returns aren’t as high as in the South in cash terms,” Beveridge said, “higher yields and lower tax bills continue to make the North the homeland of flipping.”
Egan argued that despite the higher bills, flipping remains “very popular and very lucrative when done correctly”, particularly on smaller projects. “Making a £22,000 profit on a £100,000 project is still a fantastic return,” he said. “But on a £500,000 project it’s clearly not. This comes down to due diligence and cautious figures being reviewed, with contingency built in for overruns and delays.”
He added that the surcharge on second homes was “a contentious topic”: welcomed in areas where holiday homes have priced out locals but lamented by developers. Many, he suggested, are now considering alternatives such as holiday lets and Airbnb to offset the tax.
Lenders tighten grip
For lenders, the climate has become more fraught. Louis Mason, of Oportfolio, said: “Flipping was already considered higher risk than standard buy-to-let, but the reduced profitability makes lenders even more cautious. They’re drilling much deeper into exit strategies, wanting evidence that the resale price is realistic.”
He added that bridging finance, the main source of funding for flips, was being tightened. “That might mean higher interest rates, lower maximum loan-to-value ratios, or extra conditions,” he said. “Deals in higher-value regions, particularly London and the South East, are becoming much harder to do.”
As a result, he said, flipping is becoming “a much more specialist pursuit” rather than a mainstream investment. “The margin for error is now extremely small,” he warned. “Borrowers are expected to put in more equity, plan for contingencies, and show that the property could be let out as a rental if the flip doesn’t deliver the expected return.”
A tougher business
The shift in tax policy has left casual investors at risk of being squeezed out, even as professionals adapt with new strategies.
As Egan put it: “The experienced people with more robust projects are carrying on, and we are seeing lots of activity. But lenders’ support is paramount, and products need to evolve to help with the margin squeeze that has to be mitigated.”
