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BNO Visa and UK Property Investment

The UK Government recently introduced a new visa system that will give millions of people in Hong Kong greater opportunities to live and work in the UK, as well as provide them with a route towards British citizenship.

The British National Overseas (BNO) citizenship has been in place since 1985, allowing Hong Kong residents to visit the UK freely for up to six months. This lifelong ‘pass’, which could not be passed down to family members, did not give holders any special rights.

However, owing to recent moves by the Chinese parliament to impose a severe security law on Hong Kong, the UK Government decided the announce a new scheme for Hong Kong BNO citizens, where they and their close family will be eligible to apply for two periods of five years to live and work in the UK. After the first five years, they would also be able to choose to apply for indefinite leave to remain in the UK, which means they will be able to live and work without reapplying for a visa.

The British government estimates 5.4 million Hong Kong residents will be eligible for this new scheme, which accounts for approximately 72% of Hong Kong’s 7.5 million population. These include:

  • 9 million BNO citizens
  • 3 million dependents of BNOs
  • 187,000 18-23-year-olds with at least one BNO parent

To apply for the scheme, applicants will need to buy a Hong Kong BNO visa. They would also need to prove they can support themselves and dependents financially for the first six months of their stay. More information on the BNO visa can be found on the government’s website, including how to apply.

Impact on the UK Property Market

Since the new BNO scheme was first announced, there has been an increased interest in UK property among Hong Kong buyers.

The UK, and London has historically attracted a high level of investment from Hong Kong buyers and investors. In more recent years, other major UK cities such as Manchester, Liverpool and Birmingham have also begun to see strong interest. Property and living costs in these regional cities are more affordable and are home to growing job markets.

We anticipate that interest in the UK property market will likely remain hot from Hong Kong buyers seeking UK citizenship via the BNO scheme. Most buyers will be looking at this as an investment to transfer their capital and avoid the market volatilities in Hong Kong, with a view to live in these places post migration.

As Hong Kong BNO buyers looks for property investment opportunities in the UK, it will be important to receive professional support on how to purchase the right property that would serve their longer-term goals. This will ensure that they can get access to the best options for their circumstances. For example, while there has been a strong push by property developers to sell new build, off-plan projects to Hong Kong buyers, such projects may not meet their investment objectives or relocation plans. Moreover, acquisition, taxes, income and exit strategy all need to be considered.

At Focus Property Investments (FPI), we specialise in advising overseas buyers on the best investment opportunities in the UK, and work with clients to find opportunities that meet their objectives.  Our partners include tax advisors, mortgage brokers and solicitors who are well versed with the unique circumstances facing Hong Kong buyers and are in a strong position to guide buyers in making the best investment decision. Please feel free to get in touch with us today for a free, no obligation property investment consultation.

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How to invest in UK Property?

How to invest in UK Property

Many overseas investors are attracted to invest in the UK property market. However, investing as an overseas investor can be challenging and frustrating at times. Some of the key areas that overseas investors often face difficulty include:

  • Due Diligence Process: Unlike many other countries, UK property investors are responsible for conducting all their due diligence before entering a property deal. This can include an entire range of things from obtaining a survey to ensure structural soundness of the property, carrying out local authority and other searches (title search, flood risk, environmental search, location search) as well as obtaining information from the buyer and agreeing the terms of the contract. While this is usually done by a solicitor, finding the right solicitor can be critical in ensuring the legal processes are neatly taken care of and do not create any obstacles in the future.
  • Deal Structuring and Business Set-Up: As an investor, structuring the deal correctly (especially if it involves multiple stakeholders) and getting the business set-up right for tax efficiency is critical. Not all accountants are tax experts, and hence may not be able to provide the most appropriate advice, especially for overseas investors where there could be additional rules and considerations.
  • Financing: One of the key advantages of property investing is the ability to leverage your investment. The UK offers an attractive and vibrant financing landscape, which includes buy-to-let mortgages, development finance, bringing loans and many others. Finding the right financing product to meet your investment goals and objectives is thus important, and this will requires working with the right advisers.
  • Development or Refurbishment: For most investors, after making the purpose, they would often carry out some development or refurbishment work to enhance the value of the property and ensure that it meets the right planning and regulatory requirements (e.g., when repurposing use of property or setting it up as a house of multiple occupancy). This would require working with planning consultants, local authorities, architects, builders and other trade specialists, which altogether can be a challenging task for someone based overseas.

Given the various stages described above, one of the most important considerations for overseas investors looking to invest in UK property is to find a good and reliable partner in-market, who can serve as their eyes and hands to source and oversee their investment project.

At Focus Property Investments (FPI), we have been working with overseas investors for over a decade and understand the difficulties many face in starting and building a property portfolio in the UK. Our goal is to minimise the headache on the investor side and provide a reliable and smooth process for property investment into the UK.

Over time, we have established strong and extensive network with industry professionals including solicitors, surveyors, financial institutions, tax advisors, architects, builders, planning consultants, and agents who are able to advice on issues relating specifically to foreign investors. These relationships enable us to act swiftly and decisively, so that we can capitalize on the opportunities when they arise.

If you are a foreign investor looking to invest in the UK, please get in touch with us to arrange a free discussion to talk about how we can support you in building your property portfolio.

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Property Investment in London, UK

London has remained a popular destination for overseas investors. As a global city and trading hub, overseas investors have always found London a reliable destination to park their capital for long-term growth. While there have been some mix signals about the future of the London property market following Brexit, we believe that London will continue to remain at attractive destination for overseas investors looking for a long-term investment.

Over the past decade, London property prices have increased steadily increased and this has impacted rental yields. While this has deterred many investors, we believe there remains good investment opportunities. Some of the key factors we often emphasise to investors when looking for good investment opportunities include:

  • Below Market Investment: While it is often hard to find, securing properties below market value are critical for property investors and provide a good hedge against market fluctuations, and can prove beneficial in the financing process. We have discussed how investors can go about sourcing below-market investment opportunities here.
  • Value-Adding Angle: As property investors, it is important to enhance the value of the property that you purchase, which would increase its market value and returns/yields that can be extracted. This can be done in many ways, from a simple refurbishment to freshen the image of the property to heavier refurbishment that could include increasing the total liveable space (e.g. loft conversion, rear/side extension).
  • Good Transportation Connectivity: While some investors are cautious about venturing beyond the familiar (and highly prized) Zone 1 locations within London, there are plenty of good (and more affordable) opportunities in other Greater London boroughs. These locations often offer bigger properties with some external garden space, key factors for home buyers or tenants in the new work-from-home normal. However, the critical factor of connectivity does not change, and finding a place within close proximity to a tube or train station remains essential.
  • Proximity to Good Schools: Similar to the point above, proximity to good schools can be a huge benefit and provide a premium rental yield. Moreover, tenants are unlikely to move as frequently once they find a place close to a good school for their children, offering longer leases and greater rental stability.
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Outlook for Commercial Property in 2021

Outlook for Commercial Property in 2021

Commercial property has typically been a popular asset class among institutional investors and funds and not an area which has attracted attention for retail investors.

Commercial property as an asset class tends to be higher-yielding than residential buy-to-let, and demand can be high in the right market. At the same time, commercial property contracts often come with rent guarantees along with long leases from business and corporate tenants, promising stable and growing rental income.

However, unlike residential property, commercial property is more susceptible to economic changes as it relies on business activity and job creation, and valuation is similarly driven by rental income.

In this regard, one of the effects of the Covid-19 pandemic has been the significant impact it has had on commercial property, both the larger office buildings as well as the smaller high-street commercial buildings. Stemming from this, the UK Government announced major changes to the planning system in England in September 2020, making it easier to redevelop commercial sites and build new homes to meet the country’s housing shortage. Some of the key aspects of the changes include:

  • An extension of the permitted development rights through reforms to the Use Classes Order “commercial, business and service”. This means that a wider range of commercial buildings will now be allowed to change to residential use without the need for a planning application. Pubs, libraries, village shops and other types of uses “essential to the lifeblood of communities” will not be covered by these flexibilities.
  • Flexible measures to enable vacant or redundant residential and commercial buildings to be converted to residential properties within the same footprint. The Government has mentioned that “normal planning applications” will not be required.
  • Allowance to build additional space above commercial properties via a fast-track approval process, subject to neighbour consultation. This includes upward extensions.

Altogether, these changes cut down the lengthy, bureaucratic planning impediments that hinder property investors and will allow greater flexibility to investors looking to repurpose commercial property. This opens an exciting and lucrative opportunity for investors who are looking for new opportunities to build and enhance their property portfolios.

As a specialist in both residential and commercial property, FPI is in a strong position to support investing who are interested in exploring the new opportunities in commercial property investment and repurposing. For more information, get in touch with us to arrange a free, no commitment discussion.

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Opportunities in UK Property for Overseas Buyers

Opportunities in UK Property for Overseas Buyers

United Kingdom and London in particular has long remained popular destinations for overseas investors looking to invest in global real estate. In this article, we look at some of the key reasons why.

Historically, as a developed market, the UK has attracted significant investments from overseas buyers.  The key reasons include a significant mismatch between housing demand and supply, which has in turn driven strong capital and yield growth, as well as limited restriction on the inflow of capital from overseas buyers.

  • Mismatch between demand and supply: According to the Office of National Statistics (ONS), there is expected to be a shortfall of over 100,000 homes each year for the next decade, creating an imbalance in supply vs demand. Moreover, the UK population is steadily growing, compounding the housing needs. At the same time, lifestyle choices and economic (affordability) reasons have also spurred a growing ‘generation rent’, with more people choosing to rent longer (20% of population).
  • Strong Capital Appreciation: Despite the vicissitudes of the property market, the UK property market has not disappointed investors who are invested for the long-term. As reflected in the UK House Price index below, prices have steadily increased in the past decade, on average doubling every 7 to 10 years.

  • No restriction on foreign ownership: Unlike many other countries, the UK has little to no restrictions for foreign ownership and this has allowed overseas buyers gain access to almost all types of property investment deals. This has contributed to significant capital inflows from overseas buyers. In 2019, the UK Government announced an additional 2% stamp duty for foreign buyers. While this is a dampener, we do not see this as a significant impediment for overseas buyers in the longer term.

Beyond the above factors, as we move into 2021, there are some additional reasons why the coming year or two would serve as an opportune moment for overseas buyers is looking to invest in London and UK real estate.

  • Favourable interest rates: The current Bank of England rates are at 0.1%, and are expected to remain at this level for the foreseeable future. This has provided opportunities for investors to pick up attractive financing packages to fund their real estate investments.
  • Weaker British Pound: The British pound dropped over 10% since the 2016 Brexit vote and has not recovered since despite the Brexit deal that was recently announced. This has strengthened the purchasing power for overseas buyers, making investment into UK properties more attractive vis-à-vis other developed markets like the United States and Australia.
  • Tax Efficient Structures: The tax regime is relatively straight-forward and transparent, and with a good tax advisor, investors can make their real estate investments work for them. Given recent tax changes, property investors are increasingly investing through SPVs or limited companies, which offer certain advantages. FPI also has strong partnerships with PropTech companies that simplify the set-up process and facilitate deal structuring (more applicable for multiple investors).
  • Covid-19 Impact: The fallout from the global pandemic, with a looming recession and high-level of unemployment, will inevitably feed into the property market. This could result in a drop in house prices as well as more distressed sales. This presents opportunities for investors who are able to move quickly and have funds in place to snap up bargain deals that come up.

We believe the coming years will present a good opportunity for overseas investors to invest in UK property. At Focus Property Investments, we specialise in working with overseas investors to make investing in UK property an easy and hassle-free process. For more information, please get in touch with us to arrange a free, no commitment strategy and investment planning session.