The Investor Exodus: What It Means If You're Selling in 2026

By Lisa Hayes · 16 August 2026

What happened: HMRC figures published this week show overseas private individuals sold 16,520 UK residential properties in the year to 5 April 2026, down from 18,100 the year before, according to research by Bowmore Wealth Group. Sales of £5 million-plus homes by overseas owners fell too, from 80 to 70. On its own that is a footnote. Set alongside what British landlords are doing, it is evidence of something far more consequential for ordinary sellers: the investor buyer is quietly walking away from UK residential property, and in a market already carrying near-record levels of stock, that changes who is likely to be standing in your hallway on a Saturday morning.

I want to be careful here, because this story has been reported almost entirely as a wealth story. Non-doms. Prime London. Ten-million-pound houses in Kensington. That framing is comfortable and it is also mostly wrong, or at least badly incomplete. The interesting part is not the seventy people who sold a £5m house. It is the mechanism underneath, which applies just as forcefully to a two-bed ex-council flat in Salford as it does to a stucco-fronted terrace in Belgravia.

What did the HMRC data actually show?

Bowmore Wealth Group obtained figures from HMRC covering disposals of UK residential property by overseas private individuals. In the tax year to 5 April 2026 there were 16,520 such disposals, compared with 18,100 in the preceding year. That is a fall of roughly 9%.

• 16,520UK homes sold by overseas individuals, year to 5 April 2026
• 18,100the equivalent figure a year earlier
• 70overseas owners selling £5m+ homes, down from 80
• -7%fall in UK residents worth £1m or more since 2024 (Adam Smith Institute)

Bowmore's reading is that the earlier surge in selling was probably driven by the abolition of non-domiciled tax status announced in the Autumn Budget of 2024, and that the initial rush has now worked its way through. Fewer people left because fewer people were left to leave. That is a reasonable interpretation and it is the one most of the coverage has run with.

But the firm went further, and this is the part worth your attention. Bowmore argued that UK residential property has simply stopped working as an investment. David Floyd, head of private clients at Bowmore Financial Planning, put it plainly: "It appears to be a period of readjustment for UK and overseas owners of UK property. Residential property, as an asset class, is having to face a number of challenges."

Why are investors leaving UK property?

Because the maths broke.

For twenty-five years, buy-to-let in Britain ran on a simple bargain. The rental yield was modest, sometimes barely covering the costs, but capital growth did the heavy lifting. You accepted a thin income because the asset itself was compounding at five, six, eight per cent a year. Tenants effectively paid down the mortgage while the price did the work. Nobody bought a flat in Croydon for the yield.

That bargain has now been dismantled from both ends. Capital growth has stalled. And the income side has been taxed, regulated and squeezed to the point where the numbers no longer justify the hassle.

Floyd was blunt about the comparison every investor is now making: net rental yields in London are running at around 2%. "When you can get a risk free 4.6% on a five-year government bond it makes the net yields on residential property look very low," he said. "Those low net yields on buy-to-let property were justifiable when property prices were roaring away but not now."

Read that again, because it is the entire story in two sentences. A landlord can currently earn more, with no tenants, no boiler breakdowns, no void periods, no gas safety certificates and no legislation to keep up with, by lending money to the government. Property does not need to be a bad investment to lose that argument. It only needs to be a slightly worse one.

The tax squeeze, in order

The pressure has arrived in layers, each one individually survivable and cumulatively decisive.

Change	Effect on a landlord	Status
Mortgage interest relief restriction (Section 24)	Landlords can no longer offset mortgage interest against rental income in the way they once could	Already in force
Stamp duty surcharge on additional properties	Now 5% on top of standard rates, making every new purchase materially more expensive at the outset	Already in force
Renters' Rights Act	Restricts how and when tenancies can be ended, and limits rent increases	In force from 1 May 2026
Property income tax rise	Income tax on property income rises by 2 percentage points, to 22%, 42% and 47%	From April 2027
High Value Council Tax Surcharge	£2,500 a year on homes over £2m, £7,500 on homes over £5m	From April 2028

Bowmore singled out the Renters' Rights Act as the tipping point rather than the tax. "The Renters' Rights Act is just the latest catalyst that encouraged investors to reduce their exposure to residential property in favour of equities or short-term bonds," Floyd said, adding that "the administrative burden of being a landlord, as opposed to being a stock market investor, have always been quite onerous and the new Renters' Rights Act has added an extra level of uncertainty into being a landlord."

That rings true to me. Most small landlords I have spoken to over the past year did not sit down with a spreadsheet and calculate their post-2027 marginal rate. They read about the Act, thought about the tenant who stopped paying in 2023, thought about the EPC works, thought about their age, and decided they had had enough. Tax changes are a reason. Exhaustion is the reason.

How many landlords are actually selling?

Enough to move the market, and the evidence is clearest in London. Savills reported that after the Renters' Rights Act came into force on 1 May 2026, former rental homes accounted for around 30% of new sales instructions in the capital. Zoopla's data points the same way, with roughly 4,000 landlord-owned homes listed for sale each month in London so far this year.

Nearly a third of new London listings coming from the rental sector is not a trend. It is a structural shift in what is for sale and who is selling it. And while the London numbers are the most extreme, the same pressures apply in Manchester, Birmingham, Leeds, Nottingham and every other city with a large private rented sector built on flats.

The rental side of this has been well covered. Zoopla's March 2026 Rental Market Report put rental supply 23% below pre-pandemic levels, and every home a landlord sells to an owner-occupier is a rental permanently removed from the pool. That is a genuine problem for tenants and it deserves the attention it gets.

The selling side has had almost none. Which is odd, because if you own a home and you are thinking about moving this year, it is the half that affects you.

What does this mean if you're selling your home?

Three things, and they pull in different directions.

First, your buyer pool has changed shape. For certain properties, investors were a meaningful slice of demand. Not the majority, but the fast, unfussy slice. The buyer who did not need to sell anything first, did not care that the kitchen was from 1998, did not ask for a survey-driven reduction over a bit of damp, and could complete in weeks rather than months. Take that buyer out and you are left with owner-occupiers, who are slower, more emotional, more mortgage-dependent and considerably more likely to fall through.

Second, you have more competition. Rightmove reported the number of homes for sale at its highest level since 2015 for the time of year, with almost a third of listings having had an asking price reduction. Ex-rental stock is a big part of that. If you own a two-bed flat, you are now competing with the landlord down the road who has decided to get out, who has a mortgage-free position, no chain, no onward purchase, and a great deal more flexibility on price than you have.

Third, and here is the part nobody says out loud: this is disinflationary for the exact property types that used to be easiest to sell. Flats. Ex-council. Small terraces. HMO-suitable houses near universities. Anything with a decent yield and a modest price tag. These were the investor's natural habitat. They are now the most crowded corner of the market.

Which homes are most exposed?

Not all stock is equally affected. It is worth being honest with yourself about which category your home falls into, because it should change how you price and how you sell.

Property type	Investor exposure	What it means for you
One and two-bed flats, especially leasehold	Very high	Most crowded market. Price sharply and expect a long marketing period, or consider a route that guarantees completion
Small terraced houses in high-yield areas	High	Investor demand thinning; owner-occupier demand exists but is rate-sensitive
Properties needing work	High	Investors and developers were the natural buyers here; mortgage lenders often will not lend on them
Tenanted properties sold with tenants in situ	Very high	Owner-occupiers cannot generally buy these. Your buyer pool is almost entirely other landlords, and they are leaving
Family homes, three beds and up, in good order	Low	Largely unaffected. Your market was always owner-occupiers
£2m-plus homes	Moderate but rising	The council tax surcharge from 2028 is already being priced in by buyers

If you are in that fourth row, selling a property with a tenant in place, you have the hardest job in the market right now and you should plan accordingly. Selling a tenanted property has always meant a narrower buyer pool, but the narrowing has accelerated sharply this year. Vacant possession is worth more than it was twelve months ago, and the gap is widening.

What about the wider market backdrop?

None of this is happening in a vacuum, and the vacuum matters.

Prices are flat to slightly negative. Lloyds, which runs the index formerly published under the Halifax name, put the average UK house price at £299,253 in July 2026, fractionally below June's £299,330. Nationwide's June figure was £277,484, up 2.2% on the year. Rightmove's asking price data, which measures seller optimism rather than achieved values, showed the average newly listed home priced at £372,359 in July after a 1.0% monthly fall — a drop of £3,832, and considerably steeper than the 0.2% that Rightmove says is typical for July.

Borrowing costs are stubborn. The Bank of England held Bank Rate at 3.75% on 30 July 2026 on a 6-3 vote, with three members wanting an increase to 4%. Moneyfacts put the average two-year fixed rate at 5.63% and the five-year at 5.66% at the start of August, with the average standard variable rate at 7.13%. Lenders have been cutting again since, but the direction of travel has been sideways rather than downwards for most of this year.

And transaction volumes remain thin. Mortgage approvals for house purchase in June sat around 12% below the 2017-19 average, with completed transactions about 6% below.

So is this good news or bad news for me?

It depends entirely on what you own and how quickly you need to move, and I would rather give you a useful answer than a comforting one.

If you own a well-presented three or four-bed family home in a decent catchment and you are not in a hurry, this barely touches you. Your buyer was always a family with a mortgage. Price it sensibly, present it properly, and you will sell.

If you own a leasehold flat, a small terrace, a property that needs money spending on it, or anything with a tenant in it, the honest answer is that your market has got harder and it is likely to stay harder for a while. Not catastrophic. Harder. The buyer who would have taken it off your hands in three weeks without quibbling has gone to buy a gilt.

The failure mode I see most often is a seller who prices for the market they remember, sits at that price for four months, cuts, sits again, cuts again, and eventually accepts less than they would have got with a realistic price on day one — having lost half a year and, in many cases, the house they wanted to buy. Rightmove's own data showing nearly a third of listings carrying a price reduction is that failure mode, measured across the whole country. It is worth knowing how long a property has been on the market before you assume the asking prices you see nearby are achievable ones.

What should you do now if you're selling?

Get a realistic number first. Not an online estimate, and not the highest of three agent valuations. Agents compete for instructions on price and you are not obliged to reward the most optimistic one. Our guide to how much your house is worth walks through how to triangulate a defensible figure from sold prices rather than asking prices.

Work out who your actual buyer is. Write it down. If the honest answer is "a landlord", you have a problem to solve and you should solve it now, not in November. If the honest answer is "a family with a 20% deposit", then your job is presentation, condition and chain position, and the investor story is largely irrelevant to you.

Take chain risk seriously. With investors thinner on the ground, more of your potential buyers will need to sell something first. Ask about chain position before you accept an offer, not after. A slightly lower offer from a chain-free buyer is frequently worth more in cash terms than a higher one that collapses in October.

Deal with the obvious objections before you list. Short lease, missing certificates, damp patch, unfinished extension. Investors used to absorb these problems and price them in. Owner-occupiers ask their solicitor, panic, and withdraw. Every unresolved issue now costs you more than it did two years ago.

If speed or certainty matters more than the last few per cent, look at the alternatives properly. A genuine cash purchase completes on a date you choose, with no chain and no mortgage valuation to fail. It costs you something on price, and anyone who tells you otherwise is selling you something. Whether that trade is worth it depends on your circumstances, but it is a legitimate option and it deserves a proper comparison rather than a dismissal. Our guides to cash house buyers and the pros and cons of selling to an investor set out the real numbers, including the ones companies would rather you did not focus on.

If you own a flat, act sooner rather than later. The ex-rental supply arriving on the market is disproportionately flats, and it is not finished arriving. Waiting for a better market means competing with more of them, not fewer. Our guide to selling a flat quickly covers the lease, service charge and cladding questions that stall these sales.

Will investors come back?

Some will, eventually, but probably not in the same form and probably not soon.

The small private landlord with two or three properties and a mortgage is the model under most pressure, and nothing in the current policy direction reverses that. The April 2027 income tax rise is legislated. The Renters' Rights Act is in force. The stamp duty surcharge sits at 5%. For that investor to return, either yields have to rise substantially — which means either rents rising hard or prices falling hard — or gilts have to fall back far enough that 2% net starts to look acceptable again.

Larger institutional buyers and build-to-rent operators are a different question. They have scale, cheaper capital and compliance departments, and they are still buying. But they buy new blocks in bulk. They are not going to buy your Victorian terrace, and they will never be the marginal buyer who props up prices on ordinary second-hand stock.

There is also a chance the political mood shifts. Speculation about further property taxation has been a fixture of every Budget cycle for three years now, and the new government has already ruled out changes to stamp duty. Certainty of any kind would help. Investors can price a bad rule. They struggle to price an unknown one, and while they are struggling they buy something else.

The bottom line

A 9% fall in overseas disposals is not, by itself, a story that should change your plans. But it is a visible edge of something that should: the slow, steady withdrawal of investment money from British residential property, at exactly the moment when the market is carrying the most stock it has held since 2015.

For most homeowners, that is manageable. For owners of flats, small terraces, tenanted properties and homes needing work, it means fewer buyers, more competition and a longer wait — and it means the price you set in week one matters more than anything else you will do.

The market has not fallen off a cliff. It has simply become one where the buyer you get is the buyer you have earned through realistic pricing and good preparation, rather than one who turns up because the numbers work on a spreadsheet. That is a market that rewards clear thinking, and punishes wishful thinking rather harshly.

If you want to know what your home would actually fetch today from a serious buyer — not what an algorithm guesses, and not what an agent hoping for your instruction tells you — it costs nothing to find out and compare. Start with a no-obligation valuation, look at the offers side by side, and make the decision with real numbers in front of you. There is no pressure either way, and knowing where you stand is worth a great deal more than hoping.