New residency rules could lure rich buyers, pushing up prices

Luxury homes in London may become more expensive if plans to relax residency rules for rich foreigners become law.

If passed by Parliament, the rules would allow foreigners with GBP10 million (HK$125.19 million) in assets to live in Britain for only six months of the year, instead of the current nine months, and they need wait only two years to gain residency, not five years. Foreigners with GBP5 million to invest would wait three years and those with GBP1 million, five years. Residency rules for overseas entrepreneurs would be relaxed.

Guy Meacock, associate director at buyers agency, Prime Purchase, said relaxed residency rules would encourage more wealthy foreigners to buy British homes. 'These sorts of clients are highly mobile, and the offer of further flexibility in where they reside and for how long will definitely be attractive,' Meacock said.

Foreigners would be drawn to Britain from across the world, he said.

'Western Europe still accounts for a huge percentage of the buyers at the top of the UK market, but increasingly we're seeing demand from Eastern Europe and the old Soviet states ... the Far East, South America, and Australia,' Meacock said. 'They are often entrepreneurs, who have often benefited from privatisation of previously state-owned industries, or are simply successful individuals in finance, property, or retail, for example, who see the UK as a consistent and safe vessel for their money.'

Jonathan Hewlett, director at estate agency, Savills, said most new residents would head to London, especially central districts like Belgravia, Mayfair and Knightsbridge.

'London is now a very, very cosmopolitan city with all nationalities residing or having investment property here,' Hewlett said. 'This change will make it easier for even more overseas investors to enjoy London as a good long-term investment and a great city to live in.'