Surge in Hong Kong residents becoming British landlords

The number of Hong Kong residents letting out property in Britain has doubled in just three years.

The Telegraph newspaper has reported that Hong Kong residents and expats now make up 10 per cent of all UK landlords compared with just 5 per cent in 2020, according to figures from Hamptons estate agents, as investors increasingly try to slip China’s tightening grip and avoid an emerging property price crash.

Close to a quarter of all international Buy-To-Let mortgages provided by Skipton International are now held by Hong Kong residents.

All other shares of property held by foreign landlords have either decreased or remained the same over this period, as international mortgages became trickier to obtain at affordable interest rates.

Hong Kong’s population has fallen by hundreds of thousands in recent years. By mid-2022, it had decreased to 7.29m – from 7.52m at the end of 2019, according to census data.

More recently, economic recovery and the removal of pandemic measures in the city has seen more people return – undoing some of the outflows.  

Experts said those in Hong Kong fear Chinese laws, which state an individual can only spend up to $50,000 USD (around £39,000) each year on foreign currency purchases, could one day make its way to the former British colony.

Property prices in Hong Kong also fell 15 per cent last year, according to Reuters, a decline which followed years of property price inflation. In early August, a development in eastern Kowloon was selling apartments at prices not seen since 2019 at a 20 per cent discount.

The dense population in Hong Kong has driven up housing demand. Poorer residents have increasingly been forced into cramped “coffin homes” and huts on rooftop buildings, according to reports.

British estate agents say this is fuelling a “sharp rise” in enquiries and applications submitted by Hong Kong residents about buying in the UK. Many are purchasing property for their children to live in throughout university, before letting them out.

Lorraine McLean, head of Skipton International’s Buy-To-Let mortgage team, said post-Covid she has seen “a sharp increase” in enquiries from Hong Kong buyers.

Ms McLean added: “Hong Kong buyers are focusing on city centre property. Newly built flats are easily rentable to local workers.

“London, Manchester, Liverpool, and Birmingham are popular cities, in part because they are home to some of the country’s best universities.

“A lot of people in Hong Kong have felt unsettled and the restrictions in China have made them feel like they need to get out. Many used Covid to build up their deposits.”

The UK’s universities are a big draw. Sam Lee, director at Hong Kong brokerage Capricorn Financial, said many parents of international students in the UK prefer to buy a property to save their children several years of rent payments. He added: “It can result in a good long-term investment, both in terms of rental yield and capital appreciation.

“Part of the issue is that property in Hong Kong can be considerably more expensive when compared to the UK, plus stamp duty is generally higher. There are also some concerns over the future of Hong Kong property values.”

While expats and buyers with foreign passports buying in the UK do have to pay a 2 per cent stamp duty surcharge, this pales in comparison to the 15 per cent stamp duty surcharge on second homes in Hong Kong.

Jonathan Gordon, a sales director at property investment firm IP Global, lived in Hong Kong for 20 years. He arrived back in 1997, a month before Britain’s handover of Hong Kong to the People’s Republic of China.

He said: “Steadily over the past five years, those living in Hong Kong have grown nervous about the political situation.

“In China, there are capital controls where you’re only allowed to invest $50,000 each year abroad. This hasn’t happened yet in Hong Kong, but there are undercurrents of uncertainty over whether it could.

“Hong Kong is also very expensive, and UK property is perceivably much cheaper. This has been helped by the Hong Kong dollar, which has grown stronger as the pound has grown weaker.”

Across England and Wales, Hong Kong residents now own an estimated £10.8bn in British property – the most valuable bricks and mortar portfolio of all foreign nationals – according to Land Registry figures obtained by estate agent Benham and Reeves earlier this year.

If you are interested in finding out about a UK buy-to-let mortgage, please check our free online mortgage calculator and get full details at: https://www.skiptoninternational.com/mortgages/uk-mortgages/

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