The wealth management and financial planning firm also pointed to a broader deterioration in the attractiveness of UK residential property as an investment. From 2027, income from property will be taxed at a rate two percentage points higher for investors. Earlier reforms already prevent landlords from offsetting mortgage interest against rental income, while the Renters’ Rights Act has further constrained the sector by restricting tenancy terminations and limiting rent increases.
Bowmore additionally cited research from the Adam Smith Institute indicating that the number of individuals in the UK with a net worth of £1 million or more has fallen 7% since 2024, reaching its lowest level since the Global Financial Crisis of 2008.
“It appears to be a period of readjustment for UK and overseas owners of UK property,” said David Floyd (pictured right), head of private clients at Bowmore Financial Planning. “Residential property, as an asset class, is having to face a number of challenges.
“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 added that net rental yields in London stand at around 2%, and that UK house prices have stagnated or fallen in real terms over the past decade. “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.”
