Dubai vs London property investment

Dubai or London property: which keeps more after tax?

The London buyer starts from a lower gross and is then taxed down again. No reference line is drawn here because, unlike the Singapore comparison, the two do not begin from the same number.

The rule

Every page ranking for this question does one of two things. It prints the two gross yields side by side, Dubai at seven and London at four or five, and stops. Or it runs a worked example with the London stamp duty wrong: a 3% additional property surcharge that is now 5%, and no 2% non-resident surcharge at all, which is the one that applies to a buyer who lives in Dubai.

This page runs one London flat and one Dubai flat through everything the two governments set, and nothing else.

The short answer

For someone who lives in Dubai, a London flat bought at the London average price keeps 2.35% of what it cost after UK tax this year, and 2.29% from April 2027. The Dubai flat on the net rental yield page keeps 4.33%, and no tax is charged on it. London's stamp duty alone is £58,280, 10.24% of the price, and it takes 3.95 years of the rent you keep to earn it back.

If you live in the UK instead, the gap between the two cities narrows from 1.98 points to 0.81, because the UK taxes your Dubai rent too. Most of Dubai's lead is where the owner lives, not where the building is.

The two flats

London is taken at the Office for National Statistics' own averages, not at a brokerage's "typical" yield: an average London rent of £2,332 a month in August 2026 and an average London price of £569,000 in July 2026. That is a gross yield of 4.92%. The two figures average different stocks of homes, the rented one and the sold one, so treat 4.92% as the city's rough centre, not a quote for a building.

Dubai is the illustrative one bedroom the net rental yield page prices from the Land Department's fee schedule: AED 1,500,000, AED 105,000 rent, a 7.00% gross yield.

Then one deliberate choice. The London flat is given exactly the same running cost ratio as the Dubai one, vacancy, service charge, management, maintenance and insurance together taking 34.2% of the rent. London leasehold service charges, ground rent and letting fees are, if anything, heavier than that, so this flatters London. It also removes every line that is a matter of opinion, which leaves only the lines that are a matter of law.

Getting in

In England the purchase tax is Stamp Duty Land Tax, and the buyer this site is written for pays two surcharges on top of the standard bands. The first applies "if buying a new residential property means you'll own more than one": 5 percentage points. The second: "You'll usually pay a 2% surcharge if you're buying a residential property in England or Northern Ireland" if you have not been in the UK for "at least 183 days (6 months) during the 12 months before your purchase". Both are added to every band, including the first £125,000 that would otherwise be taxed at nothing.

£58,280, or 10.24% of the price. A buyer who is UK resident and owns another property pays £46,900; the non-resident surcharge is the difference.

In Dubai the Land Department's registration fee is 4% and the whole acquisition stack, agency commission and trustee included, is 6.41% of the price. London buyers do not normally pay an agent, which narrows the gap, and London's figure above leaves out conveyancing and survey, which widens it again. The statutory tax alone is 4% against 10.24%.

Holding it

UK rent is UK taxable income wherever the landlord lives. Under the Non-resident Landlord Scheme the letting agent or tenant will "deduct basic rate tax from your rent (after allowing for any expenses they've paid)", unless HMRC approves you to receive it gross, and either way "You need to declare your rental income in a Self Assessment tax return unless HMRC tells you not to".

From 6 April 2027 the rates on property income go up by two points: "22% at the property basic rate, 42% at the property higher rate, and 47% at the property additional rate for 2027 to 2028". The scheme's withholding rate moves with them.

Whether you get the personal allowance as a non-resident depends on your citizenship and the treaty, so both cases are shown. On the London flat's £18,423 of net operating income:

The allowance assumes the flat is your only UK income. Any UK salary or pension uses it first, and then the rent is taxed from the first pound.

Side by side

The London row uses this year's rates and no personal allowance. Dubai's entry cost is the whole stack; London's is the stamp duty alone.

Leaving

Dubai charges no capital gains tax. The exit is the agency commission, which selling well prices.

A non-resident selling a UK home pays UK capital gains tax at 18% or 24% depending on where the gain falls against the income tax bands. "For the 2026 to 2027 tax year the allowance is £3,000." The stamp duty you paid is part of your cost, so it comes off the gain first. On £100,000 of gain after that, the tax is £23,280 at 24% and £17,460 at 18%.

Two procedural points catch non-residents. You must report the sale even if you "have no tax to pay on the disposal", and you must report and pay within "60 days of selling the property". Miss it and you may have to pay interest and a penalty.

Where you live decides more than where you buy

Everything above is for an owner in Dubai. Run the same two flats for a UK higher rate taxpayer and both numbers move. The London flat now pays the 5% surcharge but not the non-resident one, £46,900, and its profit is taxed at 40%. The Dubai flat's rent is taxed in the UK too, and the double tax treaty gives no relief because there is no UAE tax to credit. The tax on Dubai rental income page works that through.

Net yield after entry costs and tax, this year's rates. Dubai wins in both rows, but for the UK resident more than half of the advantage has gone. The zero tax that makes the Dubai number is a property of the owner's residence, and a buyer who has not left the UK has not got it.

So what is London for

Not income. Three things, and they are real.

Currency. The dirham is pegged to the dollar. A portfolio held entirely in dollar assets is a single bet, and for a family whose children may study or settle in the UK, sterling assets are a liability match rather than a speculation. The currency risk page covers the peg.

Depth. Title, planning law and a rental market with centuries of case law behind it. Dubai's framework is good and improving, and it is decades old.

Growth, if you believe in it. It is the argument most London buyers are actually making, and it is the one this page cannot price. The ONS reports London prices down 3.3% in the twelve months to July 2026, the eleventh consecutive annual fall, and £19,000 below their July 2025 peak. Dubai's own record, including the 85 months it took to regain its 2015 peak, is on the price index page. For a Dubai resident, London prices have to outgrow Dubai's by about two points a year, and more once its capital gains tax is paid, just to make up the income the London flat gives up.

None of those is a yield argument. If the case for London is diversification, size it as diversification. If the case is income, the tables above are the case against. The same test on Singapore reaches the same answer more bluntly, and the net rental yield calculator runs the Dubai side on your own numbers.

The arithmetic

Where it breaks

• Comparing gross yields. London's 4.92% and Dubai's 7.00% are both before running costs, entry costs and tax, and the tax is the line that differs most between the two cities.
• Using the pre-October 2024 stamp duty. The additional property surcharge is 5 percentage points, not 3, and the 2% non-resident surcharge applies on top for a buyer who has not spent 183 days in the UK in the year before the purchase.
• Assuming a Dubai address makes Dubai rent tax free. It does for a Dubai tax resident. A UK resident is taxed on it in the UK and the treaty gives no credit, which takes Dubai's lead over London from 1.98 points to 0.81.
• Assuming the personal allowance. Non-residents are not all eligible, and where they are, any other UK income uses it first. The page shows the yield with and without it for that reason.
• Forgetting the April 2027 rates. From 2027 to 2028 UK property income is taxed at 22%, 42% and 47%, and the non-resident withholding rate follows.
• Treating averages as a building. The London figures are ONS city averages of different stocks of homes, and the Dubai unit is illustrative. Your flat is neither.
• Mortgage interest on a UK letting is relieved as a basic rate reduction of the tax bill, not deducted from profit, which is worse for a leveraged higher rate owner and is not modelled here. Corporate ownership changes both sides and needs an adviser.

When to use it

Before comparing a London yield with a Dubai yield, which are not the same kind of number until both have been through entry costs and the owner's tax. Before assuming a Dubai address makes Dubai rent tax free, which depends on where you are tax resident, not where you live most of the year. And before 6 April 2027, when UK property income rates rise by two points.

Sources

1. HM Revenue and Customs, Stamp Duty Land Tax: residential property rates
2. HM Revenue and Customs, Tax on your UK income if you live abroad: rent
3. HM Revenue and Customs, Capital Gains Tax: what you pay it on, rates and allowances
4. HM Revenue and Customs, Tell HMRC about Capital Gains Tax on UK property or land if you're not a UK resident
5. HM Treasury and HM Revenue and Customs, Change to tax rates for property, savings and dividend income: technical note, 26 November 2025
6. Office for National Statistics, Private rent and house prices, UK: September 2026, released 16 September 2026, retrieved 21 September 2026
7. Executive Council Resolution No. (30) of 2013 Approving Fees of the Land Department, Article 3 and Schedule
8. Convention between the United Kingdom and the United Arab Emirates for the avoidance of double taxation, signed 12 April 2016, in force

Last reviewed 21 September 2026. Commercial relationship disclosure: the author works in Dubai real estate brokerage. See the disclosure standards. Disclosure standards.