UK’s stamp duty holiday likely to entice more Hong Kong homebuyers fleeing security law
- Inquiries from Hongkongers looking to move to London and other British cities has climbed in the wake of the easing of visa restrictions, and is likely to climb further
- The anticipated surge in interest even prompted one London-based agent to take on Cantonese translators and a lifestyle adviser to help Hongkongers settle in
London’s announcement of a stamp duty holiday until March next year is likely to entice more Hongkongers to buy homes in the UK after the British government confirmed it will allow more than 3 million residents of its former colony to seek permanent residency.
The anticipated influx has even led a London-based boutique property agency to set up a team that will include Cantonese translators, legal experts and a lifestyle adviser, to help Hongkongers settle in.
Until March 31 next year, buyers of homes worth less than £500,000 (US$631,000) are exempted from paying stamp duty, effectively removing the burden for nine out of 10 buyers based on 2019 transaction volumes, according to property consultancy Knight Frank.
Above that amount, stamp duty still applies but at a lower rate. All buyers of second homes are still subject to additional taxes of at least 3 per cent.
On July 1, the 23rd anniversary of the UK’s hand over of Hong Kong to China, London confirmed that 3 million Hongkongers that are eligible for a British National (Overseas) passport and their dependents would be given a path to eventual citizenship. That came in direct response to Beijing’s imposition of a controversial national security law on Hong Kong, seen by many as an erosion of the city’s freedoms.
It sent inquiries about UK property soaring, and the stamp duty break is likely to boost the trend, said Carol Li, business director at Asia Bankers Club, which is selling 20 UK projects in Hong Kong.
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“Since the announcement of a possible citizenship for BN (O) passport holders, inquiries have doubled. With the stamp duty cut, it will likely triple toward the end of the year,” she said.
“I expect more people are likely to buy and take less time to decide. [Besides London] people are also looking at Manchester and Birmingham because of the regeneration opportunities in these cities.”
The stamp duty holiday came in the wake of a 0.9 per cent decline in home prices in the UK in the April to June period compared to the previous quarter, the biggest drop since the global financial crisis, according to mortgage provider Halifax.
“The announcement provides a welcome boost to property transactions across the market and comes at a time when activity levels and interest have already started to recover following the two-month market shutdown,” said Liam Bailey, global head of research at Knight Frank.
The stamp duty reduction makes buying a property in the UK less expensive in terms of transaction costs than in Singapore, Canada, and Australia.
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“Many locations have higher purchase costs compared to the UK,” Bailey said. “Singapore, Hong Kong, Canada and Australia all have higher purchase taxes and have seen a rising burden over the past few years.”
In Australia, depending on the location of the property, a buyer will have to pay at least A$5,800 (US$4,044) in application fees to the Foreign Investment Review Board, a transfer duty surcharge of at least 7 per cent, and a land tax of at least 1 per cent.
In Vancouver, foreign buyers face acquisition costs of about 35 per cent of the property price.
In recent weeks, Hongkongers’ inquiries about homes in the British capital, and other big cities such as Birmingham, Manchester and Liverpool have increased, analysts and agents said.
“We have recently received approximately 25 per cent more inquiries than normal,” said Rupert Bickmore, sales director at Hong Kong-based Platinum Rise Real Estate. The development finance company has two projects in Liverpool, and one in Manchester.
Even before the Prime Minister Boris Johnson made his announcement, inquiries had risen by at least 10 per cent in the wake of the new security law, agents said.
This has led London-based Montague Real Estate to create a new division including Cantonese translators that will help Hongkongers moving to the UK pick the best schools for their children, among other services.
