Non-resident owners sold fewer UK homes last year, signaling a change in the country’s property market following years of tax and regulatory updates.
Sales drop nearly 9% in latest tax year
Overseas individuals sold 16,520 residential properties in the UK during the 12 months ending April 5, 2026, according to HMRC data. That total fell from 18,100 sales the previous year, a decline of almost 9%. The high-end segment saw an even steeper reduction, with 70 non-residents selling properties worth more than £5 million, down from 80 the year before.
The numbers indicate the surge of property disposals may be easing. For years, overseas owners confronted a series of new rules—higher taxes on rental income and tighter tenant protections—that reduced the attractiveness of residential investment. The current pace of sales suggests a stabilization, though it remains uncertain whether this reflects a new equilibrium or a temporary lull.
Tax changes reshaped the market
The UK government’s removal of the non-domiciled tax regime in late 2024 was expected to prompt more foreign sellers. The latest figures, however, show a modest slowdown instead. Bowmore Wealth Group, which reviewed the HMRC data, described the period as one of adjustment for landlords both at home and abroad.
Additional pressures are affecting the market. Starting in 2027, income tax rates on property earnings will increase by two percentage points. Landlords already face restrictions on deducting mortgage interest from rental income before calculating tax. The Renters’ Rights Act, introduced in 2025, also imposed stricter rules, making it more difficult to evict tenants or raise rents without valid reasons.
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For smaller investors, the financial outlook has worsened. Net yields on London rental properties average around 2%, while UK house prices have barely outpaced inflation over the past decade. With five-year government bonds offering a risk-free 4.6%, the appeal of buy-to-let investments has faded. The added administrative burden of managing properties, now compounded by the Renters’ Rights Act, further discourages participation.
David Floyd, head of private clients at Bowmore Financial Planning, noted that residential property faces growing challenges as an asset class. “The Renters’ Rights Act is the latest factor pushing investors to reduce their exposure,” he said. “When bonds provide a risk-free return that exceeds rental yields, the argument for property weakens.”
Some overseas owners continue to hold properties for personal use or as a hedge against currency risks. Others may be waiting for market conditions to improve before selling. The recent decline in sales points to a measured recalibration rather than a mass departure.
The coming years will determine whether the UK can maintain its appeal to foreign property investors. A mix of higher taxes, stricter regulations, and modest returns may push more of them toward alternative markets.
