As Hongkongers rush for UK property, beware of this 40 per cent inheritance tax pain

Acquiring UK residential property comes with a substantial inheritance tax liability, regardless of residence or domicile status

Estate and succession planning to ensure adequate liquidity can help avoid burdening future beneficiaries with unwelcome tax liability

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London's skyline, including the Gherkin and Lloyd's of London, with the buildings of the Docklands in the right background. Photo: Handout

Lee Sleight

Lee Sleight is head of business development Asia at Lombard International Assurance

Published: 1:00pm, 24 Nov 2020Updated: 1:02pm, 24 Nov 2020

UK property continues to benefit from strong interest from foreign investors, especially those from Hong Kong seeking a path to citizenship. London, specifically, has always been attractive, as it consistently features among the top three cities in the world for prime property investments.

Asian investors are driving this trend, as they are particularly attracted to the flexibility and potential returns, through either capital appreciation or recurrent income, that diversification through this asset class offers. The trend will accelerate over the coming years, as wealth across the Asian region grows.

Challenges to the UK market, whether it be Brexit or the additional 2 per cent Stamp Duty Land Tax surcharge for overseas buyers from April next year, are unlikely to have a lasting impact on the attraction of investing in UK prime residential property.

A combination of currency weakness, record low lending rates, demand outstripping supply and uncertainty in the global financial markets, will further motivate foreign investors to make that UK property purchase sooner rather than later.