In the past two years, there has been a surge in UK property interest from Hong Kong and overseas investors. A number of investors are yet aware of some major buying process differences when purchasing properties in Hong Kong vs. the UK. Below, we have outlined the general steps to assist investors especially considering financial preparations and timing schedule..
In Hong Kong, new buildings for purchase are often sold by developers as off-plan releases. To secure your desired apartment/home, you are required to win an ‘entry ticket’ first. Let us briefly explain the procedure of how to buy an off-plan new apartment.
After the developer announces the apartment options and prices, show home apartments will be open to the public to visit. Potential buyers will need to register their interest at the sales office on the same day or later, while the purchasing order of each group of buyers is determined by drawing lots. Prospective buyers are not required to make any actual payments until they 'win the lucky draw'.
The chosen prospective buyers shall receive the opportunity to select their preferred unit. For this reason, they are required to sign a ‘Provisional Sale and Purchase Agreement’ with the developer. A temporary deposit (about 3% to 5% of the property price) must be ready at this stage.
Buyers can then apply for a mortgage from the bank or broker with the provisional sale and purchase agreement, and loans shall be approved once the buyer has fulfilled their requirements and checks. In general, Hong Kong developers provide two payment plans, namely ‘Cash Payment’ or ‘Stage Payment’. But in recent years, some real estate developers have launched ‘Early Possession Benefit’ plans as a means to invite buyers to the market and to promote sale figures. The practice is more commonly found in the sale of luxury homes.
Both the developer and the buyer have to sign a formal sales and purchase agreement within 5 working days after signing the provisional one. The buyer is required to pay an ‘additional deposit’ (about 10% of the property price, with the temporary deposit included), and settle the stamp duty and legal fees.
Generally speaking, the developer will send a confirmation letter of purchase to the buyer through a solicitor14 days before the handover, given that all purchase procedures are completed. The buyer may present the letter for property repossession.
While some buyers would inspect the purchased apartment on their own, some solicit help from a building inspectors – it all depends on the individual's budget. The building inspection period usually lasts from 1 to 7 days, subject to different developers. The owner shall complete the building inspection and fill in any information on property damages, then the developer shall conduct rectification which usually takes one to several weeks. Without further incident, the owner normally reviews the property again within one month.
When Hong Kong citizens purchase property in the UK, many prefer first-hand new-build. However, given the radically different procedures in property purchase in HK vs. the UK, investors should not assume that the buying process is the same in Hong Kong as with the UK.
If a prospective buyer has a target UK property in mind, such as from visiting a UK property exhibition, the buyer is required to place a reservation fee for holding their desired unit, in addition to signing a reservation form. Subsequently, the buyer will instruct their designated solicitor or conveyancer to handle the legal aspects of the sale. Should all be in order, contracts are exchanged with the buyer and agent/developer. After both parties have signed, the deposit payment around 10-25%* will need to be placed. The legal process does not require the buyer to fly to the UK, as their appointed solicitor/conveyancer will assist with handling the contract. Buyers are required to pay part of the property price in instalments according to the terms.
Buyers requiring a mortgage will need to apply directly with their bank or mortgage broker. This process ought to be completed 6 months prior to the handover. Once the property is complete, the solicitor or conveyancer will notify the buyer to settle final payments such as remaining balance, stamp duty, legal fees etc. After which, the developer (or appointed lettings and management agency) will arrange for the handover process. Buyers may either inspect the property in person or have their lettings and management agency handle the snagging process.
There have been past cases of developments not being able to complete or untimely delivery, however Salboy is one of the UK's leading developers, from finance to construction and development, the entire process is homed by Salboy's teams.
As a top-tier property developer in the UK, Salboy is more uniquely placed than other local developers. Ranked among the leading developers in Manchester and the top ten in the UK, Salboy has a strong financial backing with a commitment to securing deposits with Fred Done's insurance bond. Moreover, the team at Salboy International (Asia HQ in Hong Kong), sells directly to buyers in Hong Kong and Asia, as opposed to relying on local real estate agents in Hong Kong; the best prices are guaranteed. This approach not only reduces costs for buyers but also allows the Salboy team to provide buyers with first-hand assistance and offer the utmost professional service, including assistance legals/solicitor, mortgage, handover, leasing and other matters.