7–12% Yields Overseas vs 4% in the UK: A Head-to-Head Comparison for 2026

The Question Every UK Landlord Should Be Asking

If you own UK buy-to-let property and are not regularly comparing it to international alternatives, you are managing your investment portfolio with one eye closed.

This is not a theoretical argument. It is a numbers argument. And in 2026, the numbers are stark.

UK buy-to-let delivered average gross yields of 4.2% in 2025, according to Hamptons International. After mortgage costs, management fees, maintenance, void periods, and the additional tax burden created by Section 24, most higher-rate taxpayers are achieving net returns of 1.5–2.5% on capital deployed.

Compare that to:

• Portugal: 6.9% average gross yield, net 4.5–5.5% for non-residents
• Phuket (Thailand): 7–12% gross on long-term, 10–14% on managed short-term rentals
• Spain (repossessions): Effective yields of 8–12% when purchase discount is factored in
• Florida (vacation rental): 8–14% gross, net 5–9% after management costs

The same capital, managed with the same diligence, produces dramatically different returns depending on where it is deployed. This article gives you the worked examples.

---

TL;DR: UK net yields are 1.5–2.5% for higher-rate taxpayers after Section 24. Portugal delivers 4.5–5.5% net. Phuket managed villa programmes net 6–9%. Florida vacation rentals net 5–9%. Spain bank repossessions, when you account for the purchase discount, can produce effective yields above 10%. All examples use £250,000 equivalent capital deployed.

---

Methodology: How We Calculate These Numbers

Raw gross yield comparisons are misleading. A 10% gross yield that costs 8% to run is worse than a 6% gross yield that costs 1% to run.

We use the following framework for each market:

1. Purchase price, the all-in cost including acquisition fees, not just the headline price
2. Annual gross rent, based on realistic occupancy, not optimistic projections
3. Operating costs, management fees, maintenance, insurance, local taxes
4. Net rental income, gross rent minus operating costs
5. Net yield on capital deployed, net income as a percentage of total capital deployed (including purchase costs)
6. Tax position, simplified for a UK higher-rate taxpayer

We use a base comparison of £250,000 of investable capital in each market.

---

Market 1: UK Buy-to-Let

Example property: 2-bed flat in a Northern English city (Leeds, Manchester, or similar)

| Item | Amount | |---|---| | Property price | £210,000 | | Stamp duty (5% BTL surcharge) | £16,800 | | Legal fees + survey | £2,500 | | Total capital deployed | £229,300 | | Plus 15% deposit for mortgage or full cash purchase |, |

For a cash purchase (£229,300 total):

| Item | Annual | |---|---| | Gross rent (4.8% yield) | £10,080 | | Letting agent (13%) | -£1,310 | | Insurance | -£600 | | Maintenance (1% of value) | -£2,100 | | Net income before tax | £6,070 | | Net yield before tax | 2.6% |

Tax for higher-rate UK taxpayer (40%):

Rental income taxed as income: 40% on £10,080 = £4,032 tax Less 20% credit on mortgage interest (nil for cash buyer) = £0 credit After-tax income: £6,070 – £4,032 = £2,038 After-tax net yield: 0.9%

For a mortgaged buy-to-let, Section 24 creates a tax charge on money that was spent on mortgage interest, often pushing investors into a loss-making position on paper while still generating actual cash outflow.

Verdict: 0.9–2.6% net after-tax return on cash deployment. Below the risk-free rate of UK government bonds.

---

Market 2: Portugal: Porto City Apartment

Example property: 1-bed apartment in Porto's Bonfim or Paranhos district, let on long-term rental

| Item | Amount (€) | Amount (£ approx) | |---|---|---| | Property price | €220,000 | £188,000 | | IMT transfer tax (~7.5%) | €16,500 | £14,100 | | Stamp duty (0.8%) | €1,760 | £1,500 | | Legal fees (1.25%) | €2,750 | £2,350 | | Total capital deployed | €241,010 | £206,000 |

| Item | Annual (€) | |---|---| | Gross rent (7.5% yield) | €16,500 | | Property management (10%) | -€1,650 | | IMI annual tax (0.35% of VPT ~€160k) | -€560 | | Insurance | -€400 | | Maintenance (0.7%) | -€1,540 | | Net income | €12,350 | | Net yield on capital | 5.1% |

Tax for UK non-resident in Portugal: Flat 25% Portuguese non-resident income tax on rental income (with mortgage interest and management fees deductible). UK double taxation treaty applies, UK tax credited.

Approximate tax: 25% on net taxable income of ~€14,000 = €3,500 After-tax net yield: ~3.8%

Note on capital appreciation: Porto property prices have grown an average of 7.8% per year since 2017 (INE, Portugal's statistics office). Total returns including capital growth have significantly outperformed UK equivalents.

Verdict: 3.8% net after-tax, with 7–8% historical capital growth. Substantially better than UK.

---

Market 3: Phuket: Managed Villa Programme

Example property: Studio or 1-bed unit in a managed villa complex in Bangtao or Kamala, on a guaranteed rental programme

| Item | Amount (THB) | Amount (£ approx) | |---|---|---| | Property price (freehold condo) | THB 6,000,000 | £135,000 | | Transfer fees + taxes (~2.5%) | THB 150,000 | £3,375 | | Legal fees | THB 50,000 | £1,125 | | Total capital deployed | THB 6,200,000 | £139,500 |

Note: This leaves approximately £110,500 of the £250,000 example undeployed, allowing a second Phuket unit or cash reserve.

| Item | Annual (THB) | |---|---| | Guaranteed rental return (8% programme) | THB 480,000 | | Management (included in programme) | £0 | | Net income | THB 480,000 / £10,800 | | Net yield on capital | 7.7% |

Short-term rental programmes (non-guaranteed, pool booking): typically 10–14% gross, with management fees of 30–40% of gross income, netting 6–9%.

Tax for UK investors: Thailand has no capital gains tax for foreign property sellers. Rental income from Thai property is assessable for Thai tax, but most managed programme investors structure through appropriate entities or rely on non-enforcement of non-resident rental income tax (Thai tax enforcement on non-resident overseas rental income is effectively nil in practice, though professional advice should always be sought).

UK tax: Thai rental income should be declared to HMRC. UK double taxation agreement with Thailand is relatively limited, professional structuring advice recommended.

Verdict: 6–9% net achievable, with minimal management burden on managed programmes. No Section 24 equivalent. Low acquisition cost base.

---

Market 4: Spain: Bank Repossession Purchase

Example property: 2-bed apartment in Murcia or Almería region, purchased through a bank repossession channel at a 35% discount to market value

| Item | Amount (€) | Amount (£ approx) | |---|---|---| | Market value | €200,000 | £171,000 | | Purchase price (35% discount) | €130,000 | £111,200 | | ITP transfer tax (8%) | €10,400 | £8,900 | | Legal fees (1.5%) | €1,950 | £1,670 | | Notary + registry | €1,500 | £1,280 | | Light refurbishment | €8,000 | £6,840 | | Total capital deployed | €151,850 | £129,900 |

| Item | Annual (€) | |---|---| | Gross rent (market rate, 7% on market value) | €14,000 | | Property management (12%) | -€1,680 | | Community fees (IBI equivalent) | -€600 | | Insurance | -€350 | | Maintenance (0.5% of value) | -€1,000 | | Net income | €10,370 | | Net yield on capital deployed | 6.8% | | Effective yield including equity gain on purchase | ~10%+ |

Why repossessions change the calculation: You have purchased at €130,000 an asset worth €200,000 on the open market. Day one, you have €70,000 of unrealised equity. On a capital-deployed basis of €151,850, renting at market rates (calculated on the full €200,000 value) produces a yield of 6.8%. But the real story is that you can exit at full market value, producing an immediate capital gain of approximately 32% on invested capital, plus running income while you hold.

Tax: Non-resident rental income in Spain is taxed at 19–26% depending on income level, with deductible expenses. Spain has a comprehensive double taxation treaty with the UK.

Verdict: 6.8% running yield plus substantial embedded equity. Effective total return potential significantly higher for exit-focused investors.

---

Market 5: Florida: Short-Term Vacation Rental

Example property: 3-bed vacation home in Kissimmee, Florida (near Walt Disney World), on a managed short-term rental programme

| Item | Amount ($) | Amount (£ approx) | |---|---|---| | Property price | $325,000 | £257,000 | | Closing costs (~3%) | $9,750 | £7,700 | | Furnishing (vacation standard) | $15,000 | £11,850 | | Total capital deployed | $349,750 | £276,550 |

Slightly above our £250,000 example, but illustrative of the typical entry point.

| Item | Annual ($) | |---|---| | Gross rental income (65% occupancy × $185/night avg) | $43,900 | | Management company (25% of gross) | -$10,975 | | HOA fees | -$2,400 | | Property tax (~1% of value) | -$3,250 | | Insurance (wind + flood + liability) | -$4,500 | | Maintenance | -$3,000 | | Net income | $19,775 | | Net yield on capital | 5.7% |

Higher occupancy scenarios (near premium parks, peak weeks): Properties with 75%+ occupancy delivering $55,000–$65,000 gross rent are not uncommon. At these levels, net yields of 7–9% are achievable.

Currency consideration: This income is denominated in US dollars. For a UK investor, this provides natural hedge against sterling weakness, which has been a persistent feature over the past decade as sterling has declined against the dollar from $1.70 in 2014 to $1.27 in 2025.

US tax: Foreign rental income from US property is subject to US income tax. Non-resident alien landlords are taxed at 30% on gross income unless they elect to be taxed on net income (which is usually advantageous). A US tax professional is essential. The UK–US double taxation treaty means US tax credits against UK liability.

Verdict: 5–9% net yield in USD, plus dollar currency exposure as a portfolio diversifier. US market remains legally landlord-friendly with no Section 24 equivalent.

---

Side-by-Side Comparison

| Market | Gross Yield | Net Yield (pre-tax) | Tax Structure | Management Complexity | Entry Cost (approx) | |---|---|---|---|---|---| | UK buy-to-let | 4.2% | 2.6% | High, Section 24, 40% IT | High | 8–10% | | Portugal (long-term) | 6.9% | 5.1% | Flat 25% on net income | Low–medium | 8–10% | | Phuket (managed) | 8–12% | 6–9% | Minimal (managed) | Very low | ~3% | | Spain (repossession) | 7% (on cost) | 5–7% | 19–26% on net | Medium | 10–15% | | Florida (vacation) | 10–14% | 5–9% | 30% on gross / net election | Low (managed) | 3–4% |

---

What the Numbers Are Saying

The UK buy-to-let market is not uniquely terrible because of property quality, tenant demand, or capital appreciation potential. It is uniquely terrible because of a tax and regulatory regime that has made it structurally uncompetitive with international alternatives.

The same investor capital, deployed with the same discipline into Portugal, Phuket, or Florida, produces 2–4x the after-tax income of equivalent UK buy-to-let. In some structures (managed programmes, bank repossessions), the difference is even larger.

The investors who are ahead of this shift are the ones who recognised 3–4 years ago that UK buy-to-let had peaked as a vehicle and began diversifying internationally. The investors who are making the same realisation now still have the opportunity to move capital into better-performing markets.

The investors who refuse to acknowledge the numbers are the ones who will look back in five years and wonder why their property portfolio underperformed every other asset class they could have chosen.

---

Access Off-Market Deals in All Five Markets

HPA provides UK investors with pre-vetted, off-market property deals in Portugal, Phuket, Spain, and Florida, with full due diligence packs, yield analysis, and legal framework documentation.

Apply for membership and receive deal alerts every week.