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The UK property market is renowned worldwide for its stability and high levels of growth, and in recent years has been increasingly popular with international investors.
Foreign investment in the UK is on the rise, and many investors are buying UK property from Hong Kong as a result of this.
More and more investors from Hong Kong are choosing UK properties as an investment strategy, so we have put together this blog post to help you understand what to expect if you are investing in the UK from Hong Kong.
Let’s get started!
There are several reasons why you should consider buying UK property from Hong Kong:
These are just some of the many benefits of UK investing from Hong Kong.
For more information, try our free guide on property investment, where we break down exactly why it is such a popular method of investment right now.
Buying property in the UK is similar in several ways to buying property in Hong Kong, but there are some important differences you need to be aware of.
It is similar to buying property as a resident, but you will need to be aware of some additional taxes which may factor into your purchase.
There are no restrictions to buying UK property as an international investor, but you will need to secure residential status if you want to live in your property. Therefore it is easier to invest in the UK from Hong Kong than it is to become an expat, unless you are a British national overseas.
Property transactions in the UK are done through solicitors, and often estate agents or property investment companies act as the sellers for investment properties.
Much like in Hong Kong, prices are often negotiable, with the seller putting the asking price of a property slightly higher than what they expect to sell it for. Once a price is agreed upon, the buyer will complete a memorandum of sale.
The closest equivalent in Hong Kong would be completing a Provisional Agreement for Sale and Purchase or PASP.
With investment properties, you will normally need to pay a reservation fee or the first part of your payment plan at this stage.
Solicitors for both buyer and seller will exchange contracts at this point and you will pay a deposit on the property. Again, this is a good comparison for the Formal Agreement for Sale and Purchase.
There is normally a waiting period in between the exchanging of contracts and completion of the deal, just to make sure everything is above water and legal. Once it is all confirmed by both parties, the completion of the sale means the property is now yours once you pay the rest of the price, and it is yours to do with as you need.
If you are using a buy-to-let mortgage, this is when you will begin paying off the interest you accrue using rental income, and if you are buying UK property from Hong Kong, this will be when your property investment journey really begins.
One of the main ways you will be taxed when buying UK property is through Stamp Duty Land Tax, or SDLT.
This tax is similar to Hong Kong’s Ad Valorem Stamp Duty, or AVD, and is a percentage of the property’s sale price which you will need to pay to the government, on top of the price of the property.
How much stamp duty you will pay depends on the value of the property, as the more expensive the property the higher the percentage you will be taxed on. Read our guide on stamp duty for more information.
If you are not a UK resident, you will need to pay a 2% surcharge on top of the stamp duty you would pay normally, and a further 3% surcharge if this would be your second property.
Any rent you collect from a buy-to-let property is also subject to Income Tax, while you will need to pay Capital Gains Tax if and when you choose to sell your investment property.
Prices of UK properties are far more affordable, meaning you can get a better return on your investment by investing in the UK.
The UK housing market is much more stable thanks to the high buyer and tenant demand, so Chinese investors can be assured in the knowledge that their investment is lower-risk than other investment strategies.
While you can, this is not advisable due to the high property prices meaning you will struggle to afford Hong Kong real estate, or see strong returns on your investment.
You are likely to need a British National Overseas visa if you want to borrow a UK mortgage, and you will need to put down a deposit of roughly 25% of the property’s value to convince lenders you can afford to borrow. For more information, read this guide from Online Mortgage Advisor.
Here at RWInvest, we have over 18 years of experience as one of the UK’s top property investment companies, and have worked with countless overseas buyers to help them invest in the UK from Hong Kong.
If you are interested in UK investing from Hong Kong, contact us today so we can discuss your investment goals and how we can help you achieve financial freedom.
Want to invest in the UK from another location? You may find our below guides helpful:
Buying Property in the UK From Singapore.
John is a property writer here at RWinvest. With a close eye on property market news and updates, John writes detailed and informative articles on a range of topics that are helpful for anybody looking to invest in UK property.
