Why are Hong Kong and Singapore investors flocking to buy UK property?

Published on 28.11.22
Published on 28.11.22

Recent analysis by London-based estate agents Benham and Reeves reveals a huge surge in Hong Kong investors buying property in the UK, followed closely by buyers from Singapore. Trainee solicitor Helena Unwin examines the reasons behind this trend and why UK property remains attractive to overseas investors. 

The introduction of the 2% Stamp Duty Land Tax (SDLT) surcharge for non-UK residents in 2021 led to concerns that overseas buyers might be discouraged from UK property investment. However, Benham and Reeves’ report shows this has not been the case. Buyers from Hong Kong lead the way, accounting for 9.5% of internationally registered homes, followed by nationals from Jersey in second place, with Singapore investors close behind.

Singapore investors currently own £5.8bn worth of property in London, £1.7bn in Hounslow alone. Other popular boroughs for Singapore buyers are the City of Westminster and Kensington and Chelsea, with £651.2m and £543m owned in these areas, respectively.

Why now?

The recent historic weakening of the UK pound against the US dollar is thought to be a driving force in the uptick in overseas investment in UK property. In addition to investment opportunities, rising interest has also appeared in relation to UK holidays and travel, with searches for flights to the UK from Asia increasing by 15% in September.

The Asia head of public relations for Expedia said: “A drop in exchange rates can spark travel interest and consideration to destinations where it is advantageous for the Singapore dollar.”

Hong Kong buyers have also been active for another reason. Many are drawn by the British National (Overseas) (BNO) visa scheme and are buying for personal use, not merely investment purposes.

What is a British National (Overseas) visa?

A British National (Overseas) visa may be available for someone who fits the following criteria:

  • British national (overseas)
  • 18 or older
  • Permanent home in Hong Kong, if applying from outside the UK, or
  • Permanent home in the UK, Channel Islands, Isle of Man or Hong Kong if you’re applying from within the UK.

A British national (overseas) is defined as someone who “was a British overseas territories citizen in connection with Hong Kong” and “was able to register as a British national (overseas) before 1 July 1997”.

The UK government has advised that if you are a British national (overseas), you and your family members may be able to apply for a visa, which would allow you to live, work and study in the UK.

Since the introduction of the BNO scheme in 2021, around 104,000 Hong Kong nationals have applied for relocation to the UK, with 93% of them being approved.

An article in the South China Morning Post in April 2022 noted: “As many as 322,400 immigrants from Hong Kong are likely to purchase a home in the UK until 2026, according to estimates by the British government.”

Even though the BNO scheme is not available for Singapore nationals and there has been no SDLT reprieve for international buyers, interest from Singapore buyers in the UK has not subsided. According to Benham and Reeve, this year, the split between Hong Kong and Singapore purchasers has returned from a gap of 85% in favour of Hong Kong buyers to a ballpark figure of 70%.

What does this mean for the future?

The future of the UK property market is still uncertain, with rises in mortgage rates and a fall in house prices becoming an increasing cause for concern. Despite this, experts are confident that Singapore and Hong Kong buyers will continue to be active into next year and beyond.

While London has been the hot spot for Singapore investors, Manchester, Liverpool and Birmingham have grown in popularity in recent years. Some are even looking to smaller towns with lower purchase prices, high capital growth rates and consistent rental demands.

If you have any queries regarding residential conveyancing, please contact Daniel Broughton at [email protected].