This turned out to be a negative experience for the majority of actual and potential homeowners but of course spelt an opportunity for a savvy minority of buyers with a bit of cash behind them.
That was a purely UK situation but sometimes the dimensions are international in scope. I refer to the situation in Hong Kong the former Crown colony which was returned to Chinese sovereignty in 1997 under the promise of a substantial degree of political and financial autonomy as a “Special Administrative Region”.
A generation later it seems the present Chinese government is slowly but surely abandoning staying true to the principle of “one country/two systems” which was the foundation of that agreement.
This is of more than just passing interest to myself as in the years leading up to the agreement I paid several visits to Hong Kong to promote residential property in Scotland, but particularly Edinburgh, as worthwhile investments to entrepreneurs, business owners and senior public sector officials.
Reaction, for the most part, was positive and three decades later our portfolio of rental properties under management still contains a number of (mostly high-end) houses or flats owned by Hong Kong buyers. Some let out the properties to tenants (or use them as accommodation for student sons or daughters) in the conventional way of landlords based here in the UK. Others, however were prepared to use them only as an occasional “holiday” home or simply leave the space unoccupied and rely on capital appreciation alone to provide an acceptable investment return.
Now it seems there has been a reawakening of interest in UK property among Hong Kong buyers with Skipton International, a Guernsey-based bank, reporting a surge in the first quarter of this year with HK-linked mortgage completions having trebled when compared to the same period of 2020.
The additional 2 per cent stamp duty surcharge on overseas buyers of residential properties in England - which recently came into effect - plus the original stamp duty land tax holiday deadline were said to be the two most likely causes of the increase but it appears demand continues to be strong.
A spokesman for the bank said that “as the UK is deemed by many as a solid, stable jurisdiction and in the current low interest rate environment, many investors are looking to the UK residential market”.
However could there be another factor pushing these sales?
In response to China’s crackdown on the democratic process in Hong Kong, the UK government recently opened the door to a significant number of residents in the former colony to apply for a new visa which provides them the chance to eventually become British citizens. It is believed up to 300,000 people may be entitled to apply.
Skipton Bank says that most of its HK-linked mortgages relate to England, in particular London and the South-east, followed by the North-west and Midlands. However I cannot see why Edinburgh would not also be among the most-favoured locations given the involvement, both past and ongoing, of Hong Kong investors in our capital.
The difference between now and those heady days which predated 1997 is that some of these buyers may have one eye on Edinburgh as a future permanent home and not just a property investment.
So, a window of opportunity for the Edinburgh market which, though robust at the moment, still faces the yet-unknown consequences which will follow the end of the Chancellor’s furlough scheme.
But sad that it’s opened up as a result of the adversity being experienced by the hard-working, open-minded people of Hong Kong.
David Alexander is managing director of DJ Alexander