Profits from home-flipping, the art of acquiring a property, renovating it and then quickly selling, are at a record high across England and Wales, and investors are apparently unaffected by the economic tribulations of the coronavirus pandemic, according to a report Monday from Hamptons International.
Across England and Wales during 2020 so far, the average difference between the purchase price and sale price of flipped homes—defined by the brokerage as a property that’s sold twice in the past 12 months—is £40,995 (US$54,623), the highest figure on record and up from £29,685 last year.
The gains are being underpinned by the newfound appetite for single-family homes and away from apartment living, a trend that has emerged during the pandemic as homeowners seek more space and less dense living.
Since the England’s housing market reopened in May, 5% of flipped homes were flats, down from 20% in 2019, the report said.
It's not just profitability that’s jumped, but the number of flips, too.
The proportion of homes that have been flipped across England and Wales is at 2.5%, the highest level that the metric has stood at since 2008.
The figure is expected to equate to roughly 23,000 flipped transactions by the end of the year, which would be the largest number recorded since 2007, the report said.
“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,” Aneisha Beveridge, head of research at Hamptons International, said in the report, adding that flippers play an important role in the market by improving housing stock.
“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,” she said. “At the same time, tightening yields and increased regulation have pushed some landlords away from long-term ownership towards buying, refurbishing and selling on.”
The North East and North West of England, some of the more affordable regions in England, are the areas that have seen the most homes flipped, with Burnley, within the latter, having become the home flipping hotspot.
The town has a higher proportion of flips this year than in any other locale in England and Wales, with 8.2% of transactions having been flipped, of which 81% were bought for £40,000 or less, the report said.