Chinese Investment in UK Property

You may be surprised to learn how much impact China has on the UK economy.

Since 2021, Chinese investment in UK residential property has skyrocketed, with 15% of international sales above £1 million and 20% of deals above £10 million.

This has been the case for several years. Back in 2019, there were around 800 Chinese companies in the UK, which employed a whopping 71,000 people.

Their revenue was equally colossal, totalling £91 billion.

Comparing this to 2018, it’s clear that more and more Chinese investors are choosing the UK for their money.

In 2018, Chinese companies in the UK earned a still sizeable £68 billion, but it is substantially less than 2019’s figures.

Likewise, in 2018, Chinese companies employed 62,000 people, which is 9,000 less than in 2019.

These stats show a consistent growth of Chinese investment in UK  areas from Chinese investors.

Even Brexit and Covid-19, two colossal events that shocked the UK economy, have not been enough to deter Chinese investment in UK property.

In July 2020, the Chinese international property portal Juwai.com recorded a 213% increase in enquiries for UK property.

In Q1 2020, Juwai.com found that Chinese buyers made 9.5% more enquiries for British property than the year prior.

Experts believe this increase was because many Chinese investors thought Covid-19 would be restricted to just China, and hence wanted to escape the area and identified the UK as a safe haven.

However, come Q2 2020, the virus had spread globally, so it was no longer necessary to leave to foreign countries.

This resulted in a decrease in enquiries for UK property of 54.1%.

But as both countries weathered the storm of Covid-19 and began emerging from lockdown laws and restrictions, interest sky-rocketed.

Similar numbers were also seen after the Brexit referendum, when Juwai.com recorded a rise in enquiries, increasing from 30% for UK property to 40% in the four weeks following the referendum.

The tail-end of 2022 saw significant economic and political uncertainty, which eventually led to the value of the GBP falling significantly.

Due to the lower value of the GBP – which has since stabilised in 2023/24 – this period made investment from outside of the UK more viable than ever, with foreign investors seeing more value from a property and cheaper prices as a result.

So, why do Chinese property investors choose the UK? Why don’t they select economic powerhouses like the US or other European countries like Germany or France?

There are several reasons experts believe Chinese interest in UK areas is so great, and the UK is now considered the ideal location for Chinese property investors.

First and foremost, it is crucial to understand precisely what motivates Chinese investment in UK property.

Research from Juwai.com outlined exactly what Chinese investors look for in a property.

• 83% of Mainland Chinese intend to educate their children overseas
• 61% of affluent Chinese buy international real estate for investment diversification
• 61% of rich Chinese buy real estate abroad to live in
• 37% purchase overseas property as their primary residence
• 56% of China’s HNWIs have either migrated or intend to
• 4% of wealthy Chinese invest in international property for rental income
• 28% of wealthy Chinese invest in the US for rental income

So, what do these statistics show us?

These numbers tell us that Chinese investors are looking abroad for education, they want to diversify their property portfolio, and they may want to live in the country they purchase a property from.

These numbers highlight precisely why the UK is ideal for investment, as British properties meet all the criteria for foreign investment.

Another economic factor that has sparked an increase in activity is the Stamp Duty Tax holiday.

In the UK, those buying a property pay a Stamp Duty Land Tax.

This is a tax that’s charged when you buy a property in the UK, but you’ll only need to pay it if the price of that property reaches a certain threshold.

The Stamp Duty Holiday meant that those buying a second home only needed to pay tax on properties with a value of over £500,00.

Buy-to-let investors, on the other hand, paid a 3% tax on a property up to the same amount. On average, it meant that investors could save £4,500, with some able to save up to £15,000.

Yet despite the stamp duty holiday ending in October 2021 and an additional 2% surcharge on stamp duty for non-UK buyers, buyer interest from foreign sources hasn’t been deterred.

For more on Stamp Duty Tax in 2023/24, read our latest guide covering what taxes are involved with buy-to-let.

UK house prices have increased by over 16% since the start of the pandemic, according to official Land Registry data, far outweighing the impact of the additional surcharge.

In fact, many Chinese buyers are avoiding the charge altogether by staying in the UK for a continuous 183 days before making a purchase. Some Chinese buyers buying student accommodation are even using their children’s university attendance to avoid the new charge.

It’s not just mainland China investing in the UK, though, as Hong Kong buyers are also emerging and showing interest in the country.

The UK government recently launched a special visa offering permanent citizenship after five years for around three million people living in Hong Kong.

Under current laws, those holding a BNO (British National Overseas) passport can visit the UK for up to six months without applying for residency visas.

However, from January 2021, passport holders from Hong Kong and their immediate dependents can now apply for residency visas with the view to achieving permanent residence.

The Financial Times has already reported that the UK is the top overseas market for Hong Kong buyers.

With this new influx of potential UK citizens, Hong Kong and Chinese investors will continue to flock to the UK. Hong Kong UK property investment will undoubtedly continue to increase.

It seems investment in London is starting to decrease, while trends point to the North West being a buy-to-let hotspot.

It’s clear to see why an overseas buyer, both living domestically and abroad, would consider the North West and the UK property market.

The Liverpool property market is home to some of the best-performing postcodes for high rental yields, with yields of up to 8%.

Likewise, the Manchester housing market is also booming, with yields of up to 7.78%, according to Zoopla.

House prices in the area are also incredibly attractive, with exceptional capital growth predicted over the coming years.

Savills recently updated its industry-renowned UK house price forecast. It found that UK house prices in the North West are set to increase by 11.7% by 2027 – the joint-highest growth in the UK.

Central London and wider London residential property is no longer the commodity it once was.

It seems now is the best time for an overseas buyer to invest in the North West and the UK property market.

Overall, the UK housing market is seen as a far more exciting venture for investors than the Chinese residential market.

There has been a noticeable increase in Hong Kong and Chinese investors looking towards UK properties, particularly those housed in the North West.