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Buying Property in the UK from Hong Kong

Buying property is a popular way of building financial security for later life – a tangible asset that can offer two separate streams of income, flexibility and a relatively secure market for the risk-averse. The UK property market is particularly popular because of its proven past performance, delivering substantial price increases and returns on investment.

But what about overseas buyers? How easy is it for someone in Hong Kong to take advantage of the benefits that the UK property market can provide?

For UK expats, working in Hong Kong (HK) can offer significant advantages including lower taxes, thriving culture, world-class cuisine and a bustling financial sector. But what if you’re from Hong Kong or a UK expat that wants to buy or refinance a UK property? There are several things you should consider before taking the steps towards your investment.

The Research

Towards the end of 2018, sentiment in the Hong Kong property sector seemed to soften, with the first property price declines ending an astronomical run of price increases. It’s no surprise that this prompted many investors to look to international markets for their investments. With a lower barrier for entry, high-performing rental yields and relative stability, the UK market stands out immediately.

Research by JLL also found that more than half of UK residential property investments now originate overseas, with Hong Kong cited as one of the fastest growing investment markets. A rush of buyers was noted at the start of 2019 with the unveiling of the extra Stamp Duty surcharge for overseas investors, which is planned to add an extra 1% to existing rates for standard and additional purchases in England.

A refund will be available for buyers if they spend 183 days or more in the 12 months following the day of purchase, while first-time non-UK buyers will still receive some of the Stamp Duty relief up to £300,000 despite having to pay the 1%. While the consultation is open until May 6th, it’s a consideration that future investors will have to make.

Historic Performance

Historically, the UK has been a safe investment vehicle but it’s still vital that you choose a decent investment location, particularly with property. By performing your due diligence and working with partners that have UK touchpoints, you can get a handle on where in the UK is best to invest. This research will allow you to identify markets that are overperforming or locations that fit your strategy. Where possible, you’ll want to get on the ground and see for yourself the surroundings of your potential investment but for many overseas investors, this can be difficult, which is where a trusted UK partner can help by relaying the key points of each potential investment location.

Securing Finance

In terms of securing finance for a UK property, while many British high-street banks will have reduced products for overseas investors, you still have the option of visiting professional lenders. Trusted specialist lenders tend to have a wider outlook than mainstream organisations, offering better interest rates and more favourable terms. For Buy-to-Let property purchases, this will be the most common method of financing for investors.

Enquiries into the UK from Asia for expat mortgages have increased over the last couple of years, again, mainly from Hong Kong where property prices are some of the most unaffordable in the world. Skipton International saw a 65% rise in BTL mortgages from Hong Kong investors in 2018 when compared to 2016.

While there are obviously unique challenges to buying UK property from overseas, there’s no doubt that it can hold plenty of potential for investors that are looking for consistent, stable returns and for Hong Kong investors particularly it remains a popular market to choose.

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