Right Time to Purchase a UK Apartment?

Esther Lee

Under political instability and social unrest, more and more Hong Kong people are thinking about migration. Since the release of relaxation of BNO policies, there is an increasing trend of Hong Kong people looking for migration to the UK. However, many factors have to be taken into consideration when considering the decision to migrate and right timing to make the move. 

Among many are the financial aspects which need to be taken into consideration; one of which would be the cost of purchasing a residential unit in the UK. Notably, purchasing an apartment in the UK will incur heavy stamp duties on the buyer, which often deters people from buying properties. However, having suffered severely from COVID-19, the UK has a great demand for cash inflows with high priority on the recovery of its economy. One of the fiscal policies adopted by the UK is the exemption of stamp duty on the first £500,000 of all property sales in the UK and the Northern Ireland deal before 31st March 2021. Under this policy, the cost of purchasing an apartment in the UK has fallen significantly, as the property value of £500,000, a cost of £15,000 could be exempted. 

Moreover, the current GBP:HKD exchange rate is at a relative historically low level of 9.9511 HKD/GBP, which indicates that the cost of purchasing an apartment is further lowered if the purchase happens now, from a HKD perspective, with most market prospects predicting that the exchange rate would be increasing in the near future.

Furthermore, this phenomenon also applies to investors with sufficient capital who could consider investing in UK properties as well. Given that stamp duties are invested and the current GBP: HKD exchange rate is low, it would be a favourable price for Hong Kong investors to consider including UK properties into their portfolio. There are mainly three sources of income for them. Firstly, passive income through leasing the property. Secondly, from the historical average property prices in the UK, it is observed that overall, there is an increasing trend. Thus, in the future, when investors find the property price is at a reasonable price to sell, there could be a favourable return for them. Third, the GBP:HKD exchange rate is foreseen to be increasing, remaining at a higher rate compared to the current position.

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It is no wonder that we saw a surge in information regarding UK properties in the market in the 2nd and 3rd quarter of 2020.