Chinese investment in UK property

People from Hong Kong and mainland China often send their children to schools in the UK, buying second homes here for them with an eye on investment. A recent report into Chinese interest in UK property found that return on investments, connectivity, close proximity to top schools and universities and safety are top considerations of mainland Chinese and Hong Kong buyers when purchasing homes in and around London.

As many as 5% of property buyers in London are from China – and 50% of UK property bought by Chinese buyers is in London. But financing isn’t always straightforward for them. Aaron Stutt of Trinity Financial says: “We regularly speak to Chinese buyers who want to purchase property in the UK, but it can be tricky to get mortgages agreed for them through high street lenders.There are private banks specifically targeting Chinese buyers, but they often prefer them to be from mainland China. They are also keen on wealthier borrowers from Hong Kong and Singapore.”

Chinese buyers are well served by private banks, who increasingly have Mandarin or Cantonese speaking staff. Strutt explains: “They are taking the time to understand traditions and how buyers from the Far East like to do business.” Private banks also have a responsibility to ensure that all transactions are above board – they have strict ‘know your client’ and anti-money laundering rules, which have tightened up recently. “They can only lend to buyers who can demonstrate how they earn their money and the source of wealth, plus they tend to have minimum loan sizes,” explains Strutt.

For UK developers, Chinese interest has the ability to affect the market significantly. Since 2015, when Chancellor George Osborne said: “No economy in the world is as open to Chinese investment as the UK,” and later the referendum in 2016, Chinese investment in UK property has increased year-on-year, despite the pandemic. In fact, since 2021, Chinese investment in luxury prime central London residential property has soared, accounting for 15% of international buyer home sales above £1 million and 20% of deals above £10 million. 

Just as the British education system is held in high regard in China, so is the UK property market, which is widely seen as a safe and profitable space for investment. High rental yields contribute to the attraction, and owning a stake in London’s prime property market is widely seen as a status symbol in China. Buyers might not even want to visit their properties in person, but hold it as a trophy asset. London remains a gold standard for Chinese investors and this doesn’t look likely to change.