UK Home Office: The estimated number of immigrants to the UK could reach up to 833,000 within 4 years.
Since the UK government promised to relax the BNO immigration policy, many people from Hong Kong have chosen the UK as their first choice for immigration. The UK Home Office estimates that the number of immigrants to the UK from 2021 to 2025 could reach up to approximately 833,000 people. As a result, many people from Hong Kong are fervently purchasing UK property.
At the same time, with the Bank of England's consecutive interest rate hikes, the benchmark interest rate has risen to 0.04%, and mortgage rates have followed suit. Moreover, there are signs of adjustment in house prices and rents, leading to a surge in buyers opting to purchase properties with cash instead of mortgage loans.
Cash buyers account for 40% of the market, marking a new high since December 2014.
Statistics from UK estate agency Hamptons have found a significant rise in the proportion of cash buyers. Currently, about 40% of property transactions are made in cash, far higher than the 29% seen in the past two years, and it even marks a new high since December 2014. With mortgage interest rates currently standing between 0.05% and 0.06%, the number of buyers needing to apply for mortgages has dropped in the past three months, especially among first-time home buyers. In contrast, the proportion of cash buyers has surged.
The biggest advantage of purchasing property with a mortgage in the UK: More liquid funds on hand.
- Buying a property with a mortgage provides you with more liquid funds.
Some local banks in Hong Kong offer mortgages for UK properties, which can be processed in Hong Kong. Some large banks, including HSBC with its UK background, also offer mortgages for UK properties. They can provide up to 70% to 75% of the property's value as a mortgage, depending on the bank's interest rate, which ranges from 0.03% to 0.0375%. The maximum mortgage term can reach up to 25 years. Buying a property with a mortgage allows you to make installment payments, easing the burden of a one-time payment.
If we're talking about buying rental properties in the UK, you can get a mortgage for up to 75% of the property's value (the maximum in Hong Kong is 50%). So, with roughly HKD 50,000, you can become a homeowner. Given this, why do so many people still choose to buy UK properties with cash?
The advantages of buying a property in cash in the UK include: simpler procedures, more affordable prices, and relatively lower risks.
- Speeds up the process, allowing for a quicker property purchase.
The advantage of a cash buy is that the process of purchasing UK property can be faster. Provided there are no legal issues, the transaction of UK property can be completed in just a few weeks. Compared to applying for a mortgage on UK property, which involves a relatively complex application process and longer waiting times (often over 4 weeks for approval), the waiting time for a cash buy is much shorter.
- Due to the convenience, it increases the chance of getting the property owner to lower the price.
At the same time, because the procedure is faster, many property owners often don't mind giving a discount for the convenience and peace of mind it brings. Cash buyers may also be able to negotiate a lower price with the property owner, typically achieving a price 6% lower than the original asking price. However, buyers who need to apply for a mortgage usually have to pay 3% more for the property.
According to data, cash buyers currently receive an average discount of 8% (about HKD 200,000) compared to mortgage buyers.
For example:
- Cash buyers in the northwest of England can obtain a discount of 10% (about HKD 190,000), but mortgage buyers pay 6% more than the average price.
- The smallest difference between the two is in the southwest of England, where cash buyers only get a 2% discount. Cash buyers can also negotiate a lower price with the property owner, typically achieving a price 6% lower than the original asking price.
How can MyHMO help you?
MyHMO is a Hong Kong company specializing in UK HMO properties. It is dedicated to helping buyers find ready-made UK HMOs and discover properties with potential, and then transform them into UK HMOs. This brings them more rental income. Compared to Buy-to-let properties, UK HMOs have higher rental income (see our detailed explanation foranalysis of the 7 major investment tools), the government's operation of HMOs even makes rental income and administration more stable.
We provide a one-stop service for UK property buyers, with experts who have over 18 years of experience. For more details, you can inquire with us.
