Entropy

Property investing across Europe's major cities continues to captivate investors seeking both yield and capital appreciation. Yet beyond the glossy marketing and TikTok success stories lies a more nuanced reality of regulatory hurdles, compressed yields, and market-specific challenges. This analysis cuts through the hype to examine what's actually happening on the ground in key European markets as of spring 2025.

The blunt-truth snapshot (spring 2025)

London
Typical purchase: £9,000–12,000 per m²
Gross long-let yield: 3–4% (UK avg 6.7% but London is lower) Global Property Guide
Airbnb ADR & occupancy: £136 ADR • 74% occ. → ≈ £34k gross/yr per flat Airbtics | Airbnb Analytics
Key local rules: 90-day cap on entire-home STRs unless you obtain change-of-use planning; high SDLT (add-on 3% for 2nd homes) Houst, GOV.UK
Quick take: Cashflow only works if you: ① run legally as a serviced-apartment with planning, or ② accept the 90-day cap and treat Airbnb as peak-season turbocharge. Capital appreciation is the main upside.

Barcelona
Typical purchase: €6,000–8,000 per m²
Gross long-let yield: 4–5.5% Global Property Guide
Airbnb ADR & occupancy: €132 ADR • 86% occ. Airbtics | Airbnb Analytics
Key local rules: Ten-year moratorium on new tourist licences; re-sales trade at a premium. Strict fines. Airbnb Newsroom
Quick take: If you don't already own a licence you're out; with a licence the cashflow beats London, but political risk is sky-high.

Lisbon
Typical purchase: €4,500–6,500 per m²
Gross long-let yield: 5.5–7% (rents up 10% YoY) savills.pt
Airbnb ADR & occupancy: €100 ADR • 85% occ. Airbtics | Airbnb Analytics
Key local rules: 'Alojamento Local' freeze in most central freguesias; IMT purchase tax up to 8% Rental Scale-Up, PwC
Quick take: Still decent yields if you buy in a green-zone district or pivot to medium-term (90-day+) lets.

Berlin
Typical purchase: €5,000–7,000 per m²
Gross long-let yield: 2.5–3.5% (low regulated rents) Berlin Real Estate Agent
Airbnb ADR & occupancy: €113 ADR • 79% occ. Airbtics | Airbnb Analytics
Key local rules: Permit & registration number compulsory; Grunderwerbsteuer 6% in Berlin Airbnb, German Probate Lawyer
Quick take: Attractive capital-growth story but weak cashflow; STR works only with a (hard-to-get) permit.

Paris
Typical purchase: €10,000–14,000 per m²
Gross long-let yield: 3–4.7% Global Property Guide
Airbnb ADR & occupancy: €150–170 ADR • 74% occ. (2023-24) Airbtics | Airbnb Analytics
Key local rules: 120-day cap on primary homes; convertibles need commercial zoning; notaire fees 7-10% Hostaway, French-Property.com
Quick take: Olympic after-glow aside, profits are crushed unless you own multiple units converted to "résidence hôtelière".

Amsterdam
Typical purchase: €7,500–10,000 per m²
Gross long-let yield: 5.5–6.2% Global Property Guide
Airbnb ADR & occupancy: €221 ADR • 87% occ. Airbtics | Airbnb Analytics
Key local rules: 30-night annual limit on entire homes without special permit; 10.4% transfer tax (dropping to 8% in 2026) Airbnb, business.gov.nl
Quick take: Jaw-dropping nightly rates wiped out by the 30-night rule. Works only as room-share or if you snag a scarce B&B permit.

*Asking-price range for centrally located 1-bed flats, spring 2025.

London – can you really make money?

The UK capital remains one of Europe's most competitive markets, with investors constantly weighing substantial acquisition costs against potentially modest returns. Let's break down what's really happening on the ground:

Entry costs are brutal.
Stamp Duty + 3 % surcharge means ~£30 k tax on a £600 k flat. Finance at 4–5 % BTL rates, plus service charge/council tax ≈ £4–6 k pa. (GOV.UK)
Long-let route:
- Net yield after costs typically ~2 %.
- Works only if you bank on capital growth or are leveraging equity cheaply.
Airbnb/serviced-accommodation route:
- Gross £34 k → after 15 % Airbnb fee, cleaning (≈ £80–90/turn), utilities, insurance and a 20 % management cut, realistic net is ~45-50 % of gross = £16–17 k.
- At a £600 k purchase price that's a 2.7 % net yield – better than long-let but still not eye-watering.
Regulatory choke-points:
- 90-day cap; platforms auto-block calendars.
- Boroughs increasingly require planning use-class C1 for full-year SA.
- HMRC now receives platform income data automatically.

Verdict: London can cash-flow, but only when you:

niche into high-ADR locations (prime West End, Shoreditch lofts, riverside units),
secure legal C1/SA status or operate within 90 days,
keep leverage sensible so rising rates don't eat the spread.

How the Continent stacks up

With London as our benchmark, how do other major European cities compare? Each market presents its own mix of opportunities and challenges, shaped by local regulations, tax structures, and market dynamics.

Mediterranean hotspots (Barcelona, Lisbon): better nightly margins if you inherit or buy a grandfathered licence. Political will is to curb STRs, so licence scarcity is part of the "moat" but also a risk.
Regulated capitals (Berlin, Paris, Amsterdam): authorities treat STR as housing leakage. Caps/permits are tight; compliance costs high. Profit is still possible by renting rooms (not entire homes) or running hybrid mid-stay (1–11 months) models that slide under hotel rules.

Beyond the headline yields and restrictions, investors must also navigate the complex web of taxation that can significantly impact returns across different jurisdictions:

Tax friction:

UK
Purchase tax / notary fees: SDLT up to 15% bands
Annual property tax: Council Tax £1–3k
Personal tax on rents: Income-tax band; mortgage interest only 20% credit

Spain
Purchase tax / notary fees: 6–10% ITP/IVA + AJD
Annual property tax: IBI 0.4–1.1%
Personal tax on rents: 19–24% on gross for non-residents

Portugal
Purchase tax / notary fees: IMT to 8% + 0.8% stamp
Annual property tax: IMI 0.3–0.8%
Personal tax on rents: Flat 28% or NHR regime

Germany
Purchase tax / notary fees: 3.5–6.5% Grunderwerbsteuer
Annual property tax: Grundsteuer low (0.26–1%)
Personal tax on rents: 14–45% prog.

France
Purchase tax / notary fees: 7–10% closing costs
Annual property tax: Taxe Foncière 0.2–1.2%
Personal tax on rents: 17.2% social + 11-45% income

Netherlands
Purchase tax / notary fees: 10.4% (8% from 2026)
Annual property tax: OZB ~0.05–0.2%
Personal tax on rents: Box 3 wealth tax 1.2–1.7%

(RSM Global, PwC, PTI Returns, French-Property.com, business.gov.nl)

So, where does the money really flow?

Having examined the numbers and regulations across major European markets, clear patterns emerge in terms of investment strategy viability. Let's assess where each approach performs best:

Capital appreciation play
London: ✔ historic resilience, deep liquidity
Southern Europe (e.g. Lisbon): ✔ renovating stock, foreign-buyer demand
"Rules-heavy" capitals (Paris, Amsterdam): ✔ but entry price already high

Cash-flow via long-let
London: ✖ low yield after costs
Southern Europe (e.g. Lisbon): ▲ stronger yields
"Rules-heavy" capitals (Paris, Amsterdam): ✖ yields low & rent-controls

Cash-flow via Airbnb
London: ▲ if you stay legal & optimise pricing
Southern Europe (e.g. Lisbon): ✔ highest spread where licence valid
"Rules-heavy" capitals (Paris, Amsterdam): ✖ regulation caps nights hard

Practical tips before you wire any funds

Before committing capital to any European property market, consider these essential strategies to protect your investment and maximize returns:

Model net returns, not blog-post gross. Use realistic occupancy (70-75 %), Airbnb fees, cleaning, 20 % management, 10 % maintenance contingency.
Stress-test interest rates +2 %. 2022-24 taught us that cheap money isn't guaranteed.
Check licence/zone status first, buy later. In every city, compliance is the make-or-break variable.
Plan an exit. Political mood is turning against STRs—factor in a scenario where you must pivot to medium-let or sell.
Get local tax advice. Cross-border investors often overpay or miss allowances (e.g., UK's capital-allowances for furnished holiday lets, Portugal's low AL VAT thresholds).

Bottom line

Yes, you can still make money in London—but only with sharper pencils and a legal strategy. Cashflow margins are thinner than TikTok makes them look, and the city is quietly pushing amateur hosts back toward 90-day hobby-letting or professionalised aparthotels.
If your primary goal is yield, chase Iberia—provided you lock in a legitimate licence.
If you want sleep-well-at-night regulation, accept lower returns and look at long-term lets in Berlin or Paris.

In every case, the winning edge is operational excellence plus compliance, not just buying a flat and sprinkling fairy dust. Crunch the numbers, talk to a lawyer, then decide whether you're in for the long haul or the quick flip.

What's your strategy for navigating these challenging but potentially rewarding markets? The window of opportunity remains open—but only for those who enter with eyes wide open to both the risks and rewards.