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Rachel Reeves’ raid kills profits for property investors | Personal Finance | Finance

A stamp duty raid by Chancellor Rachel Reeves has hammered profits for property investors and delivered a hammer blow to the market for flipping homes.

Official figures show the number of homes bought and resold within a year, typically by people seeking to turn a quick profit, has dropped to the lowest level in more than a decade.

Just 2.3% of properties in England and Wales were flipped in the first quarter of 2025, down 1.3 percentage points since 2024 and the lowest figure since 2013, according to analysis by Hamptons estate agency.

The number of flipped homes sold between January and March stood at 7,301, 27% below the ten-year average for the same period.

The collapse in activity has been blamed on the decision by Ms Reeves to hike stamp duty costs and axe the discount introduced under Liz Truss. Experts say the soaring tax bill has wiped out returns, with Hamptons warning it now swallows up nearly a third of gross profit on each flip.

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.”

Ms Reeves’s first Budget in March saw the stamp duty surcharge on second homes increased from 3% to 5% – a move designed to curb landlords and favour first-time buyers.

At the same time, she allowed the Truss-era threshold for stamp duty exemption to expire in April, slashing the tax-free band from £250,000 to just £125,000.

The policy shift has pushed up costs sharply for anyone buying and refurbishing a property. According to Hamptons, the average stamp duty bill on a flipped home has more than tripled in the past decade, from £1,900 to £6,375.

Ms Beveridge said: “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.”

In some cases, stamp duty alone is now larger than the cost of the renovation work itself. While 80% of flipped homes still sold for more than the purchase price earlier this year, just 66% delivered a profit once tax was accounted for.

Ms 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.

“These are often empty homes which need a lot of love and are typically projects that most first-time buyers and movers have shied away from.”

The typical profit on a flipped home in the first quarter of this year was £22,000 – up from £16,000 in 2024 but still far below the peak of £38,000 recorded in 2022, and lower than levels seen ten years ago.

Hamptons said flipping now only makes sense in areas where property prices and taxes are lower. In the first three months of the year, 61% of flipped homes were in the Midlands, the North and Wales – up from 50% a decade ago.

Ms Beveridge said: “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.”

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