Hong Kong Home Buyers Seeking Haven in the U.K. Look Beyond London but Caution is Advised
In the past six months, 42% of all overseas property exhibitions in Hong Kong featured the U.K., according to Eli McGeever, the vice president of international property at SohoApp.com. Manchester has become so popular that it’s now the focus of almost one in three of those U.K. exhibitions, he said.
London, the traditional destination for rich Hong Kongers buying in the U.K., still has the largest presence. But as the demographics of buyers shifts towards the middle class, it’s no longer the automatic first choice.
Go outside the pricey south, and U.K. properties get dramatically cheaper
That message about relative value is something you can’t miss if you’re in Hong Kong right now and in the market for a property. There are advertisements for northern U.K. residential projects on the front page of newspapers, on billboards and running across social media.
The number of exhibitions in Hong Kong marketing U.K. property has soared
Would-be buyers also need to be cautious and look beyond the appealing sticker prices. Here are just a few things to consider:
- Check your numbers: Especially for those looking for an investment property, do the numbers still stack up in the Covid era? Traditionally, northern cities like Manchester and Sheffield were attractive for landlords because their large student population offered a steady stream of tenants. Is this still a realistic assumption? Additionally, apartment rents in cities are falling around the globe. Check the basis on which any estimates are offered.
- Tax window: Two tax sweeteners that have increased the lure of the U.K. are due to end next year. A temporary discount on sales tax will end for all, and foreign buyers will face a surcharge. Mortgage brokers are reporting long waits for loan approvals, meaning that deals might not be completed before the deadline.
- Know what you are buying: Do you have enough information to be comfortable about the purchase? Is the developer reputable? If it’s an existing property, are you sure there aren’t any surprises about the area? What would you actually own? There are two main types of property tenure in the U.K.: leasehold and freehold. In a leasehold, you essentially rent a property for a period of years. Properties with short leases can be difficult to resell or remortgage.
- Check your comparables: When checking similar sales, factor in things like government school catchment areas, which in the U.K. can radically alter prices.
- Job availability: For those who are thinking of relocating, remember why property is cheaper in cities beyond London. One key reason is that the local economies aren’t as strong or wages as high.
Source: Bloomberg 12 November 2020