How Hongkongers can navigate pitfalls in UK housing market

Mark O'Neill March 22, 2021 08:28

Last year Alan Chan, manager in a large insurance company, decided to take advantage of the BNO offer and emigrate to UK with his wife and three-year-old son. Last August, he flew to Heathrow airport with his father for a nine-day visit to choose a home.

Having decided that London and southeast England were too expensive, the two started their search in Manchester. Driving a car, they covered 2,000 kilometres and six cities. They chose somewhere Alan had not thought of before – Wakefield in the north, He paid 258,000 pounds for a detached house with 1,258 square feet on two floors.

“It is 30 minutes by car to Leeds, a large city, where I can find work in insurance,” he said. “Wakefield is cheaper than a big city. It has few Chinese, so my son will meet British children and integrate more easily.”

Thousands of Hong Kong people moving to UK are making the same journey. They are looking in towns and cities outside London, Oxford, Cambridge and other ‘brand cities’ that have traditionally attracted funds from Hong Kong investors.

“From last July, we had a lot more first-time buyers looking across the whole price spectrum – certainly a lot of younger couples with children,” said Andrew Sprowell, managing director Asia at BuyAssociation, an investment consultancy that helps those moving to UK.

“That meant our investigation for them changed from purely an investment matrix to which postcodes they should live in to be in the catchment of a certain school. They are far more emotional about that purchase, on the basis they could move there in the future,” he said.

Chen said that 70 per cent of the property information he sought was available on the Internet. “But the other 30 per cent which you see for yourself is very important – the neighbourhood, law and order, proximity to schools and convenience of shops.” He and his father visited 40 different sites.

“For the first six months, I will help my wife and son adapt before I look for work,” he said. “We will take funds to cover us for the first 12 months or more without work.”

Buying a property in UK is not so simple as in Hong Kong. It is difficult to sign a tenancy agreement without a UK bank account and to open such an account without a permanent address.

Chen chose a property that was being built. The benefit is that, in May this year. he will move into a house that is completely new. The risk is that the developer may run out of money and not finish the work. A foreigner is less familiar than someone living in the UK with which developers they can trust and which they cannot.

“There is a risk,” he said. “But we chose Taylor Wimpey, one of Britain’s biggest developers. It is listed on the stock market.”

A majority of properties in UK are old; many are more than 50 years old. They carry other kinds of risk – damp, mould, structural weaknesses and interior damage. These may require substantial spending after a purchase and before you can move in.

Richard Leung, a property agent in UK, recommends prospective buyers of an older property hire a surveyor to inspect it, at a cost of 600-800 pounds. “If the market price is cheaper than other homes in the same street, there must be a reason. If the surveyor finds a structural problem, my advice is to let it go, even though you lose the fees for the surveyor and the lawyer.

“Hong Kong buyers should learn how to do household repairs themselves,” he said. “Do-it-yourself (DIY) is a big business in the UK. You can easily buy the materials yourself. Hiring people to do repairs costs money and takes time – British workers take long breaks and holidays.”

Another risk is the “chain” effect. This happens when the owner will not sell until he has purchased another home. This may cause a delay of several months. “If the vendor can move directly into a new home, then he can maintain his existing mortgage. If he cannot, he may face an early replayment charge. Most vendors do not want to pay this,” said Leung.

Mary Lau met her husband, a second generation British from Hong Kong, during a holiday there. After they married, they bought a property in London and had their first daughter. Her husband is an architect. When she was pregnant with their second daughter in 2017, they decided to move to the western city of Bristol. 90 minutes from London by train.

In Bristol, they have a detached house with three rooms. “Many families have made the same decision to give their children more space. Prices in London are too expensive, even in suburban areas,” she said.

“My advice to migrants from Hong Kong is to rent first and then buy. Spend time to understand different locations, their advantages and disadvantages. Things are not the same as at home, You need time and knowledge before you make the best decision,” she said.

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Mark O'Neill

A Hong Kong-based writer, teacher and speaker.