Dubai Rental Yields vs UK Buy-to-Let: Side-by-Side
Strip away the marketing and run the numbers properly. Here's how a £400,000 Dubai apartment compares to a £400,000 UK buy-to-let on gross yield, tax, and total return.
UK landlords have been quietly migrating capital to Dubai for the last three years — and the numbers explain why. This is a like-for-like comparison of a £400,000 investment in each market, run honestly, with all the costs UK buy-to-let promoters tend to skip.
The headline yield
UK buy-to-let, 2026: rental income is typically modest nationally, thinner still in London and the South East, and somewhat stronger in the North East and parts of the North West (where higher income tends to come with weaker capital growth and more management complexity). Indicative and not guaranteed.
Dubai, 2026: well-chosen apartments have offered notably stronger rental income potential than the UK average, particularly in value-driven communities such as JVC. All figures are indicative and not guaranteed — income varies by building, community and market conditions.
From gross to net — the cost stack
UK side: 5–10% management fee, mortgage interest (deductible only via the basic-rate tax credit since 2020), insurance, certifications (gas, electrical, EPC), wear-and-tear, void periods (national average 3–4 weeks per year), and an increasingly aggressive selective-licensing regime in many councils.
Dubai side: 5% management fee, annual service charges (AED 12–25 per sq ft — model this carefully), Ejari registration, DEWA standing charges, and shorter average voids (1–2 weeks) thanks to a more liquid rental market.
Tax — where the gap really opens
UK buy-to-let income is taxed at your marginal rate (20%, 40%, or 45%). Mortgage interest is no longer fully deductible — it's now a 20% tax credit, which means higher-rate landlords pay tax on revenue, not profit. A higher-rate landlord with a 75% LTV mortgage can easily see effective tax rates above 50% of net rental profit.
Dubai rental income is taxed at 0% in the UAE. As a UK resident you still declare it on UK self-assessment, but with no UAE tax to credit and a much cleaner mortgage interest position on UAE-side debt, the effective tax leakage is typically lower than on a UK property.
On exit: UK CGT at 18–24%. Dubai CGT in the UAE: zero. (UK CGT still applies to UK-resident sellers — see our tax guide for the full picture.)
Worked example — £400,000 each side, cash purchase
UK buy-to-let, Manchester city centre 2-bed: £20,000 gross rent, £4,500 costs and voids, £15,500 net before tax. Higher-rate landlord pays £6,200 tax. Net cash in pocket: ~£9,300.
Dubai, JVC 2-bed: £30,000 gross rent (AED 140,000 approx), £6,500 costs and service charges, £23,500 net before tax. UK higher-rate tax on that profit: £9,400. Net cash in pocket: ~£14,100.
Difference in this illustration: roughly £4,800 more cash per year on the same capital, before any capital growth. These are indicative worked examples using recent market averages, not a projection or promise for any specific property.
Capital growth side
UK house prices have grown only modestly in recent years, while Dubai saw a far stronger run off the back of the 2021 reset. Past performance is no guide to future returns, values can fall as well as rise, and no growth can be promised, but Dubai's structural drivers — population growth, business migration, Golden Visa demand, and 2040 master plan — remain intact. The UK's are not.
The honest caveats
Dubai is a foreign-currency asset (AED, pegged to USD). For sterling-based investors that's a feature, not a bug — but it does add a layer to consider.
Service charges in Dubai can rise meaningfully on premium buildings. Always model the highest charge band, not the launch-year teaser.
Selection matters more than the market average. The figures above are indicative and historical, not a forecast or a promise — returns are never guaranteed, and values can fall as well as rise. Nothing in this guide is financial or investment advice.