A growing number of Hongkongers leaving for Britain under the British National (Overseas) passports scheme are ending up in short-term housing that typically cost more than traditional flats because of the scarcity of readily available abodes, according to a leading property agency.
Short-term leases can cost between 16.8 per cent and 76.2 per cent more than traditional flats, according to Marc von Grundherr, director of property agency Benham and Reeves. Delays in the sales and purchase process and the search for suitable housing could add up, forcing many Hongkongers to leap into their emigration without arranging accommodation, or even securing jobs, which contribute to the lack of usable credit record.
“Transactions are delayed due to a bottleneck fuelled by a stamp duty holiday, [so] many Hong Kong buyers have had to rely on (short-term leases) and hotels to put a roof over their heads at an extortionate cost,” said von Grundherr. “We’re advising those coming via our Hong Kong office to opt for a rental property initially. This has now become the preferred method of relocating to the UK for 95 per cent of our clients.”
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An estimated 5.4 million Hongkongers are eligible to move to Britain under the BN(O) programme, which was offered by London to the residents of its former colony following Beijing’s imposition of a sweeping security law in Hong Kong last year. As many as 35,000 Hongkongers had applied for the visa as of mid-April, merely 10 weeks after the scheme was launched, according to UK Holmes, a London property search agent.
The shift to a “short-term basis” renting in prime London areas has prompted “sellers who are keen to capitalise on a recovering sales market and the stamp duty holiday (to sell and move) into short-term rental properties whilst either searching for or finalising their purchase,” according to Andrew Weir, chief executive at London Central Portfolio, a buying agency.
There is no official data about the number of Hongkongers seeking short-term accommodation, but anecdotal evidence from property agents, real estate portals and landlords suggest that short leases and hotels are becoming popular options for many newly arrived immigrants in Britain.
“For newly arrived immigrants to London, a [short-lease] flat typically looks more attractive than a hotel room,” said Terry Stephens, founder of UK Holmes. “It is more functional with separate living and sleeping quarters and tends to be cheaper. However, conventional short-term lets can be three to four times more expensive than equivalent housing stock in the long term.”
A UK Holmes survey last year of 600 respondents from Hong Kong found that although 81 per cent were considering applying for the BN(O) visa, this did not necessarily translate into an immediate intent to purchase a property. About half of the respondents said they were intending to buy real estate within the next 12 months, while 27.8 per cent had plans within the next one to two years and the remaining 27 per cent said they would need more than two years to buy property.
“We have seen inquiries from Hong Kong residents wishing to rent before they commit to a purchase in the UK,” said Ivan Fiaccabrino, lettings manager at Johns & Co. “Many are unfamiliar with the market and so they want to test out different neighbourhoods before deciding where to invest for the longer term.”
Hong Kong-based landlords who have British properties agreed that many of their fellow Hongkongers have had to resort to short-term rentals as agents require credit history and proof of income.
“A key advantage in renting is it gives them the cushion of time to start employment, build their credit score and enable them to obtain finance,” von Grundherr said.
Those who cannot produce a source of income or does not have a credit record are likely to be asked an upfront payment for a year’s worth of rent, according to Jabbie Yip, a businessman from Hong Kong who leases out flats in Birmingham.
“As long as they have a bank statement that shows sufficient funds, [they will be able to find a flat in the UK],” said Aby Wong, who moved to Britain. She said it took her a while before getting a job in London. She now rents a place in Woolwich Arsenal.