Foreign investors China Hong Kong

Overseas property investors to take advantage of UK currency drop

The UK housing market is often viewed as a safe haven for foreign investors. The current climate could attract more overseas investment than ever to the country.

The property market in the UK is one of the most popular in the world among foreign investors. The country is one of the world’s top economic powers and financial centres, with London at its heart. Housing is under continually high demand, and in recent years this has spread to the country’s further regions. This is particularly prominent in parts of the north and Midlands, which have become hubs for foreign investment.

Now, with the ongoing health crisis, the global economy is coming under pressure. In the UK, interest rates are at an all-time low, making mortgage borrowing extremely cheap. Further to this, the pound is low against the dollar, which has been exacerbated by recent events.

For Chinese and Hong Kong investors in particular, the conditions are attractive on many levels for property investment in the UK.

What’s more, the Hong Kong dollar is performing relatively well amid the turmoil. This means investors can get even more value for money when investing in UK property.

“In almost every market where Hong Kong buyers are significantly active, they can buy property for much cheaper now than just a couple of weeks ago,” said Georg Chmiel, executive chairman of Juwai IQI, an international property portal. “The economic fallout is pushing other currencies down as investors fled to the safety of the US dollar.”

Future tax changes

In the most recent UK Budget statement, new Chancellor Rishi Sunak announced some big tax changes. The most important one for foreign investors involves stamp duty.

From 1 April 2021, all overseas investors in UK property will be eligible to pay a 2% stamp duty surcharge on residential property investments. That’s assuming we don’t see any major changes as a result of the ongoing effects of coronavirus on the economy.

This means many buyers from abroad will be keen to push on with their investments over the next 12 months. Chinese and Hong Kong investors in particular, because of the favourable currency exchange rates, could be particularly keen to see investments through now.

Jonathan Benarr, director of APAC at global property portal Quintessentially Estates, said: “We have seen an over 300% increase in client requests for buy-side support since the coronavirus outbreak. The main cities of interest are Sydney, London and Lisbon.”

Opportunities away from London

In the UK, London is just one of many property investment hotspots. In recent years, investors who have diversified into areas such as Manchester, Liverpool, Birmingham and Leeds have achieved very high yields.

Wealth that was once centred in the capital is now moving further afield. A number of major businesses now operate in cities in the north and Midlands, with more set to follow. This means employment prospects and talent pools in these areas are growing.

With cheaper starting prices than London, these areas can offer greater opportunity for growth if you make the right investment choice. For foreign investors in particular, these areas hold excellent prospects right now.

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