Investors and property professionals alike attending Buy London: The Developing Skyline may wonder where the driving force behind such an event comes from. Why is it those with money to spend in China choose to do so on bricks and mortar in the UK capital?
Columnist Linhua Liu, who writes for Sina Properties UK , The Wharf’s partner in their event at the Radisson Blu Edwardian New Providence Wharf, is expert in answering that question and a rich seam of advice when it comes to buying and selling in that market.
She said: “There are many attractions for Chinese buyers looking at the UK.
“In China people cannot really own land, they can only own houses so if they buy freehold property in the UK they can own land. That’s one of the attractions
“London is also attractive to people considering emigrating from big cities in China as their population is very high, there’s lots of pollution, a fast-paced lifestyle and intense work hours. In comparison the UK is preferable.
“In addition, the property market in the UK is very transparent and safe – the legal system is very well established so there are no under the table deals. Everything goes through a solicitor, even the money so Chinese buyers feel it’s a very safe procedure and, language-wise, lots of Chinese people speak English so they understand what’s going on.
“English is easy to learn compared with French and German so it’s a very transparent market for the buyer.”
London also offers many attractions for those who just want to own abroad rather than make the move.
“The rental yield on properties is still quite high here, at least 3% in central London areas,” said Linhua.
“In China investors have experienced inflation so they have a low rental yield for their properties in the domestic market. Investing money overseas is a good option as opposed to just putting the money in the bank with very low interest rates.
“The London population is high – up to 9.4million by 2020 – so there will be a very strong market for buy-to-let. If we think about the suburb areas – Zones 5 and 6, the cost will be a bit lower so investors can get a higher return. In the UK, we also have a very reasonable tax system. Council Tax, for example, is not extremely high. If we compare it with the property tax in the US, America’s is much higher, more than double in some cases.
“Also, in Canada or Australia both governments have introduced much higher Stamp Duty taxes to penalise overseas buyers to try to deter them.”
In contrast the increase in Stamp Duty for investors that came into force earlier in 2016 is less of a concern for Linhua. In fact, she believes this week is the perfect time to buy.
She said: “It will have an impact on small landlords but very affluent investors will not see it as a big factor.
“Another very strong attraction following the EU referendum is the weakness of the pound.
“In comparison to last December we are at the lowest point this week – currently about 16% off the price Chinese investors would have paid at the end of 2015. Now really is the best time to buy.
“Other than that, before the referendum there was a lot of uncertainty so the developers have not really made enough sales. Now there are more discounts available as a result so for high-end properties priced at more than £2million developers are offering more than 10% discount, even up to 17%.
“For those very high end properties buyers can get up to 30% off when the weak pound is taken into account.”
For those hoping to make sales at Buy London: The Developing Skyline, Linhua had some advice.
“From my experience the Chinese client will not just ask you about property, they’ll ask you about tax, about whether you have advice on transferring money out of China.
“They will also ask you about schooling, education and buy-to-let investment. They will also want to know about the letting process and management options, all the legal requirements and how to find good tenants.
“They will want to know in great detail about the rental prospects and net return on an investment.
“If you can answer all of them, then the client will follow you, they won’t shop around.
“If you demonstrate you are capable and professional to answer all of their queries then they will trust you and stay loyal.”
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