"I help middle-class Chinese citizens become London landlords"

Londoners who rent new builds are probably paying off the mortgages of non-doms.

It’s an entire industry backed by the biggest names in property development: Berkeley Homes, Barratt, and Gatehouse Bank.

It’s called Build to Let.

I spoke with an insider who dealt with the legal side of things. She wanted to remain anonymous. Call her Susan. 

Susan said:

“This is how it works”

1️⃣ Chinese brokers approach Chinese citizens on WeChat or through more traditional advertising methods, offering them an exciting investment opportunity: a new housing development in London. 

“You know the kind,” said Susan. “Massive, glossy identikit new builds, the kind you see in Vauxhall, Battersea and all over East London.”

Like this:

New builds require up to 60% private capital before construction starts. You could call it an anchor investment to get the development started.

This requirement isn’t a legal mandate, by the way—it’s a commercial decision. 

Lenders give developers pre-sale targets—between 40% and 60% of pre-sale units sold—who, in turn, sell property units pre-construction to secure the capital. 

But the property brokers don’t target Chinese billionaires—far from it. 

“Most of the contracts I saw were with high-earning professionals,” said Susan. “Managers and consultants, not billionaires.”

2️⃣ These Chinese citizens then receive a loan—a mortgage, in other words—from a bank or a non-bank lender calculated based on their earnings and net worth. 

And lo! The Chinese citizens are now landlords. 

3️⃣ Then, through an agency, the Chinese citizens rent the properties to Londoners at sky-high prices. 

This is an entire industry

The Build to Let sector is responsible for building 30% of new homes in London. 

In 2023, 20% of those new homes were sold to overseas buyers.

Most foreign buyers are non-residents from:

🇭🇰Hong Kong (13.7%)

🇸🇬Singapore (8.2%)

🇺🇲USA (6.5%)

🇦🇪UAE (5.8%)

🇨🇳and China (5.2%). 

According to the HM Land Registry, Hong Kong nationals own 25,972 homes across London. 

But the People’s Republic is on track to take the lion’s share. The number of Chinese nationals owning UK property is growing fast, at 13% yearly. 

Why do these developers target people from the Far East? 

UK consumers think such schemes are too risky, and aren’t accustomed to buying houses before they’re built. 

Why is this happening? 

There’s a lot of money to be made. 

International banks and overseas private equity funds profit from these ‘Build to Let’ schemes. 

“They’re getting too rich to care,” said Susan.

“These global banks loan money to the lenders, who lend the money to the Chinese citizens, who then buy into these schemes—it’s a big chain of money.’ 

This is called ‘warehouse lending’.

“Lenders receive a loan from a big bank but pay interest and fees for the privilege. The banks have an incentive to do it.”

Essentially, none of this would be happening if it weren’t for global capital making a few people exceedingly wealthy. 

How has this affected London house prices?

If you want to know why house prices are so expensive in London, track the Build to Let scheme. 

It started in September 1997. Up until then, house prices increased slowly or stagnated year on year. 

By the late ‘90s, house prices accelerated.  

More build-to-rent homes are being built, and more are being sold to overseas buyers as investment holdings. 

And the problem is only getting worse. 

Other research shows that London’s cruel and unusually high house prices are linked to wealthy foreigners buying housing stock and renting it to locals. 

More foreigners are buying more housing to rent yearly. 

One real estate investor said, “Overseas buyers are essentially underpinning the market… If the number of overseas buyers were restricted, developers might struggle to get the level of off-plan sales to support their funding requirements, which would make some schemes unviable.” 

I call ‘bullshit’. It’s holding someone hostage and forcing them to pay the ransom. 

The numbers don’t lie: Londoners were better off without them.