Investing in UK property from Hong Kong
In this guide we will talk you through everything you need to know about investing in UK property if you are from Hong Kong.
Why invest in UK property from Hong Kong?
The Hong Kong housing market is in a bit of a tough spot at the moment. After being named the world’s most expensive real estate market in 2020, the region has suffered in the aftermath of the pandemic as a result of Hong Kong’s zero-Covid policies led to a mass exodus of residents. As the property market in Hong Kong continues to feel the effects of the pandemic, many investors are turning their heads to UK property investment.
The UK has become one of the most attractive places for Hong Kong residents to invest their money in recent times, in particular in buy-to-let property and it’s easy to see why. The UK property market is performing extremely well, as both house prices and rents continue to rise across the country, even amid the economic uncertainty of the last few years. Throughout Brexit and the Coronavirus pandemic to name a few, UK property was not only stable but has actually soared to record-breaking heights during the aftermath. In the last year alone, house prices in the UK increased by 10.7%, and this impressive performance has seen the UK property market solidify its status as one of the lowest-risk investment classes in the world.
With global property experts like Savills and JLL predicting that both house prices and rents will continue to rise over the next five years and beyond, now is the perfect time to consider investing in UK property if you live in Hong Kong, in order to diversify your portfolio with one of the most lucrative investment opportunities available – and we’re here to talk you through everything you need to know about the process.
- 10%
House prices in the UK have increased by over 10% annually for the last 2 years.
- 17.4%
Property prices in the UK are set to increase by an impressive 17.4% in the 5 years to 2026 (Savills, 2021)
- 19.9%
Rental growth in the UK is set to increase by an impressive 19.9% in the 5 years to 2026 (Savills, 2021)
What are the tax implications for Hong Kong buyers investing in UK property?
Stamp duty land tax (SDLT)
Any non-resident who purchases a property in the UK will be subject to both the standard stamp duty land tax rates, as well as an additional 2% surcharge. Click this link to see the most up-to-date SDLT rates.
Inheritance tax
Non-UK residents who purchase a property in the UK will be subject to inheritance tax. On death, 40% inheritance tax is levied on the value of all UK situated assets for non-UK domiciled individuals.
ATED
ATED is a yearly tax payable by companies that own residential property with a value of more than £500,000 in the UK. For the most up-to-date ATED rates, visit this link.
Capital gains tax
Capital gains tax is a tax on the profit realised on the sale of a non-inventory asset and is required by both UK and non-UK residents upon the disposal of residential property in the UK. Visit this link for the most up-to-date rates.
Income tax
Any rental income you earn on your UK investment property will be subject to income tax. This can be paid in two ways – either earn your income in full and then pay tax through a self-assessment tax return or allow your lettings agent or tenant to deduct the tax automatically. For up-to-date income tax rates, visit here.
What documentation do you need to invest in UK buy-to-let from Hong Kong?
When it comes to investing in UK property from abroad, there are a few forms of documentation that are required before you can move forward with the purchase to comply with UK anti-money laundering and fraud laws. These checks will usually be conducted by solicitors, banks and the agent your purchase through. These documents include:
- Proof of identity – your passport or driving license are ideal
- Proof of address – a bank statement, utility bill or driving licence are required
- Source of funds – Payslips, tax returns and proof of benefit are among the documents that can be used as proof of source of funds
These documents may be requested at numerous stages throughout the investment. So, it is important to have the ready from the get-go in order to avoid any unnecessary delays to the process.
Do I need a visa to invest in UK buy-to-let from Hong Kong?
When investing in UK property from Hong Kong you do not need a visa for any investment under the value of £2 million – anything over that and you may apply for a tier 1 investor visa if you meet the requirements. All you should need is the documentation mentioned above. It is important to note that buying a property in the UK does not make you eligible for a UK visa, this is an entirely different process.
Can I get a buy-to-let mortgage when investing from Hong Kong?
Whilst you are technically able to attain a buy-to-let mortgage when investing in UK property from Hong Kong, the process is much more challenging as many UK lenders are unwilling to lend to a non-UK resident, whilst those who do will request higher deposits and charge larger interest fees.
Where should I invest in the UK?
Whilst London has long been one of the most popular and desirable locations for property investors based in Hong Kong, northern cities have proved to be much more lucrative in recent years thanks to their lower price points and higher rental yields. Cities such as Manchester, Liverpool and Leeds are just a few examples of leading northern buy-to-let locations!
Find out about our current UK property investment opportunities today!
