A family that bought a Marylebone flat in 2014 for £1,200,000 finds in 2026 that it is worth £1,250,000, that the rent is £4,500 a month, that the service charge has doubled, that the tenant now has an open-ended tenancy, and that a cousin in Dubai is earning 7 per cent on a villa. Should it sell or hold? The answer is six inputs and some arithmetic, worked through five cases; the tax on sale often decides.
Market notes
Sell or hold? The decision on a let London flat in 2026, with the arithmetic
The question
For a let London flat the question is what it nets against what the proceeds would earn elsewhere. The worked Marylebone flat, worth £1,250,000 and renting at £54,000 a year, nets £26,800 after costs and tax, 2.1 per cent on value; sale proceeds of about £1,195,000 need only 2.2 per cent after tax elsewhere to match. Selling costs about 4 per cent, and capital gains tax runs at 18 or 24 per cent on the gain. The catch: a large gain is a tax reason to hold; no gain is none.
Not “will London recover?” but “what does this flat earn me, net, against what the money would earn elsewhere after the cost of moving it, and what do I lose by waiting?” A flat that nets 2.5 per cent and might appreciate is not worse than a Dubai villa at 7 per cent if the family values the sterling, the legal certainty and the use; it is worse if the family values none of those and has a better use for the capital. The firm’s role is to put a number on each side, not to defend London.
Six factors that decide whether to sell or hold
1. Net yield now, after service charge, agent, void, repairs and tax, as our yields guide computes it. 2. What the net proceeds would earn elsewhere, net of that country’s tax and risk. 3. Capital gains tax on sale now, against the tax (or no tax) on a later sale or on death. 4. The sterling rate against the dollar now and the family’s view of it. 5. Whether the family uses or might use the flat, and whether it could get it back from a tenant. 6. The cost of selling, and the cost of buying whatever replaces it.
Net rental yield test on the Marylebone flat
The firm’s arithmetic for the Marylebone flat in the introduction:
Net yield against sale proceeds, Marylebone flat, 2026
| Marylebone flat, 2026 | £ |
|---|---|
| Value | 1,250,000 |
| Rent | 54,000 |
| Service charge, agent, void, repairs, insurance | (20,500) |
| Profit before tax | 33,500 |
| UK tax at 20 per cent, no personal allowance | (6,700) |
| Net | 26,800, 2.1 per cent on value |
| Net proceeds if sold (after CGT and costs, below) | about 1,195,000 |
| Required return elsewhere to match, after that country’s tax | 2.2 per cent |
Source: firm’s calculation on the worked example, October 2026; GOV.UK capital gains tax for non-residents.
Any safe sterling or dollar return above 2.2 per cent after tax beats holding, on income alone. The other five inputs are why the firm’s clients mostly still hold.
Capital gains tax on selling a London property as a non-resident
A non-resident pays capital gains tax on the gain since purchase (or since April 2015, rebased, if owned then) at 18 per cent within the basic band and 24 per cent above, less the £3,000 annual exempt amount, with a 60-day return.
Capital gains tax worked examples: Marylebone flat and Kensington house
On the Marylebone flat the gain is £50,000 less the costs of buying and selling, so the tax is small, about £5,000; on a Kensington house bought in 2005 for £2,000,000 and worth £6,000,000, the tax is about £950,000, and that is the number that decides.
Death, gifts and the long horizon
Death wipes the gain (the heirs inherit at market value, and pay inheritance tax instead, as our inheritance guide explains); a gift to a child does not, as our gifting guide explains. An owner with a large gain and a long horizon has a tax reason to hold, and an owner with no gain has none.
How the sterling exchange rate affects a Gulf owner's sale
A Gulf owner’s proceeds are dollars. Sterling at 1.33 is far below 2014’s 1.70; selling now converts at a rate the family may regret if sterling recovers, and selling later may convert at a worse one. The firm does not forecast and advises owners not to let the rate decide, but to notice that a flat bought at 1.70 and sold at 1.33 has lost 22 per cent in dollars before any sterling price change, and that holding is, among other things, a sterling position. Our currency guide sets out hedging for a sale as for a purchase.
Renters' Rights Act: recovering possession of a let flat to sell
Since 1 May 2026 a tenant has an open-ended tenancy and the owner recovers possession for a sale under the sale ground with four months’ notice, not in the first twelve months, and with a penalty for reletting within a period after; a family that wants the flat back to use it has the same notice and the same wait.
Selling a London flat with or without the tenant
Selling with the tenant in place is possible to an investor, at a discount of 5 to 10 per cent against vacant possession for ordinary stock; selling vacant means serving notice, the tenant leaving, a void of four to six months through marketing and completion, and the flat standing empty with its costs. Our Renters’ Rights guide sets out the grounds; the practical effect is that the decision to sell is taken six months before the sale.
Cost of selling a London flat, with the Marylebone example
Agent 1 to 2 per cent plus VAT; solicitor £2,000 to £4,000 plus VAT; energy certificate; the lease pack if leasehold (now the seller’s cost in practice); capital gains tax; the void; and, if the proceeds go to the Gulf, the currency cost. On the Marylebone flat about £45,000 to £55,000 all in, or 4 per cent of the value, which is a year and a half of net rent.
Selling to buy again: why a London round trip costs so much
A flat sold and the proceeds reinvested in another London flat pays stamp duty again on the way in, which is why “sell this one and buy a better one” costs 15 to 20 per cent of the value in round trip and is rarely right unless the first flat is wrong.
Five owner cases: whether to sell or hold in London
Five owners the firm has advised, and what the inputs said:
Five typical cases, 2026
| Owner | Position | The firm’s view |
|---|---|---|
| Bought 2014, no gain, 2 per cent net, no family use, money wanted for a Riyadh business | Sell; the tax is nil, the yield is beaten at home, the use is nil | Sell, with the tenant in place to avoid the void, hedge the sterling |
| Bought 2005, £4m gain, 1.5 per cent net, family uses it in summer | Hold; the tax on sale is about £950,000, the use is real, death resets the gain | Hold, plan inheritance tax, consider a will and a declaration of trust |
| Bought 2021 off-plan in Nine Elms, value down 15 per cent, 3.5 per cent net, service charge rising | Hold unless the service charge is out of control; selling crystallises the loss | Hold five years; review the block’s accounts yearly |
| Bought 2016, modest gain, 2.5 per cent net, child starting at Imperial in 2027 | Hold, and serve notice in 2026 for the child’s occupation under the family ground | Hold; the flat’s best use is coming |
| Bought 2012, large gain, 2 per cent net, family never visits, no heirs in the UK | Sell or gift; inheritance tax at 40 per cent on the whole value is the threat, not CGT | Model sale against gift against trust with a tax adviser this year |
Source: firm’s advice on typical client positions, October 2026; GOV.UK capital gains tax for non-residents.
Sources: Capital gains tax on UK property for non-residents (GOV.UK) · Renters’ Rights Act 2025 (legislation.gov.uk) · Private rent and house prices, UK: September 2026 (ONS) Figures verified 14 October 2026.
Frequently Asked
Questions about selling or holding a London flat
Prices are at 2014 levels in sterling and lower in dollars; it is a buyer’s market, and a seller gets a buyer’s price. It is a bad time to sell for a profit and an acceptable time to sell to redeploy, if the redeployment is worth it.
If the buyer is an investor, yes, at a 5 to 10 per cent discount and with no void; if the likely buyer is a family, no, and the notice and void must be planned.
Residents pay it too, on UK property, and at the same rates. Only death or the spouse exemption removes it; our guide on selling as a non-resident explains.
On the worked Marylebone flat, worth £1,250,000 with rent of £54,000 a year, service charge, agent, void, repairs and insurance take £20,500, leaving £33,500 before tax. UK tax at 20 per cent with no personal allowance is £6,700, so the net is £26,800, or 2.1 per cent on value. Net proceeds of about £1,195,000 need only 2.2 per cent after tax elsewhere to match.
Agent at 1 to 2 per cent plus VAT, solicitor at £2,000 to £4,000 plus VAT, the energy certificate, the lease pack if leasehold, capital gains tax, the void, and the currency cost if the proceeds go to the Gulf. On the Marylebone flat that is about £45,000 to £55,000 all in, 4 per cent of the value, or a year and a half of net rent.
18 per cent within the basic band and 24 per cent above on the gain since purchase, or since April 2015 if owned then, less the £3,000 annual exempt amount, with a 60-day return. On the Marylebone flat the gain is £50,000 less costs, so about £5,000. On a Kensington house bought in 2005 for £2,000,000 and worth £6,000,000, about £950,000.
Since 1 May 2026 the owner recovers possession for a sale with four months’ notice, not in the first twelve months of the tenancy, and with a penalty for reletting within a period after. Add a void of four to six months through marketing and completion, so the decision to sell is taken six months before the sale.
Rarely. The proceeds reinvested in another London flat pay stamp duty again on the way in, so the round trip costs 15 to 20 per cent of the value. The firm’s view is that it is right only when the first flat is wrong, for example a block whose service charge is out of control.
The firm does not forecast and advises owners not to let the rate decide. Sterling at 1.33 is far below 2014’s 1.70, so a flat bought at 1.70 and sold at 1.33 has lost 22 per cent in dollars before any sterling price change. Holding is, among other things, a sterling position; our currency guide covers hedging a sale.
Hold. In the firm’s worked case, an owner who bought in 2016 with a modest gain and 2.5 per cent net, with a child starting at Imperial in 2027, serves notice in 2026 for the child’s occupation under the family ground. The flat’s best use is coming, and selling would mean paying stamp duty to buy again.
