Interest from international buyers in UK real estate has seen a sharp decline, driven largely by recent changes to the country’s tax policies — particularly those affecting wealthy non-residents.
According to data from brokerage firm Hamptons, the share of foreign buyers registering to purchase property in the UK fell to just 1% in the first quarter of 2025 — the lowest level on record. The drop has been especially pronounced in Central London, once a prime destination for global investment. In 2009, foreign nationals accounted for around 8% of transactions; today, that figure has dropped to under 3%.
A Chilling Effect: Tax Reform Pushes Buyers Away
Experts attribute the downturn to reforms targeting non-domiciled residents — individuals who live in the UK but claim tax residency elsewhere. The new regulations have significantly increased the financial burden on this group, while also introducing greater uncertainty. As a result, many now prefer to rent rather than buy.
“It’s the tax reforms that have halted the inflow of overseas investors,” says Aneisha Beveridge, head of research at Hamptons. “Higher stamp duty on second homes, the fallout from Brexit, and the tightening of non-resident tax rules have all made UK property less attractive.”
Who’s Pulling Out — And Who’s Coming In
The steepest decline in demand has been observed among European buyers. In contrast, interest from North American investors has surged. Hamptons reports that 16% of international transactions in Q1 2025 involved North Americans — up from just 6% in 2008.
Beveridge attributes this trend to a strong US dollar and growing political uncertainty in the United States, which is prompting some investors to seek safer options abroad.
London and the South Lose Ground
Beyond the capital, southern regions of England — once accounting for up to 40% of international purchases — are also seeing diminished foreign interest. Today, that figure has dropped to below 30%.
A Changing Landscape
The UK’s tax policies have reshaped the property market, shifting the focus away from ownership toward rental, and prompting many investors to look elsewhere — at more predictable or more favourable jurisdictions.
Britain’s real estate market is undergoing a revaluation of purpose, with fiscal policy now playing a central role in defining its future.
Historical Context: From Safe Haven to Storm Zone
UK property has long been viewed as one of the world’s safest asset classes. After the global financial crisis of 2008, London emerged as a symbol of stability, attracting capital from investors seeking protection from currency risk, political unrest, and economic volatility in their home countries.
Throughout the early 2010s, foreign buyers accounted for up to 13–15% of transactions in some quarters, with a significant portion directed toward luxury property in central London. For investors from the Middle East, China, Russia, and India, high-end UK real estate became a sort of “gold standard” for capital preservation.
But the picture began to change rapidly with the UK’s exit from the EU and the tightening of tax rules. In 2021–2022, foreign buyers faced additional stamp duties, and by 2025, the latest reforms targeting non-doms effectively ended the traditional investment model for many.
Impact on the Rental Market: Demand Grows, Prices Rise
A drop in purchases doesn’t mean a total retreat. Many foreign nationals are now opting to rent instead of buy, especially those in the UK temporarily for work, study, or business — all while sidestepping long-term tax obligations.
This trend is already visible in central and southern London, where the high-end rental market is seeing rising demand for properties priced at £3,000 per month and above. In some prime postcodes, luxury rents have climbed 8–10% year-on-year, according to market analysts.
The growing number of international renters is placing additional pressure on an already strained rental sector, particularly in areas popular with students and corporate tenants. The result: rising costs not only for foreigners, but also for local residents — especially young professionals.
What’s Next: Will the Market Recalibrate Again?
Analysts warn that unless the UK government introduces more flexible tax mechanisms or dedicated schemes for international investors, the capital outflow could intensify. This could impact not only property sales but also related industries such as construction, legal services, consulting, and asset management.
At the same time, there may be a rise in interest in grey areas — such as acquisitions through corporate structures or via third-party jurisdictions. Some developers are already adapting, offering rent-to-own schemes or premium rental packages, signalling the birth of a new “flexible property model.”
In the medium term, market watchers predict a shift in focus from London to other urban centres such as Manchester, Birmingham, and Edinburgh, where property prices remain lower and economic activity continues to grow steadily.