(Bloomberg) -- The U.K. may have an unlikely solution to its housing crisis: wealthy overseas students and pre-fabricated homes.
InvestUK, a foreign direct investment adviser, and Hong Kong-based Gaw Capital Partners plan to raise 1 billion pounds from the sale of a bond and use some of the proceeds to finance property projects including affordable homes, the firms said in a statement. Overseas students who invest at least 2 million pounds ($2.46 million) will gain permanent residence after five years.
“We can offer some Chinese students what they want -- that is permanent residence when they graduate -- provided they invest in something the country actually needs,” Rupert Gather, chairman of InvestUK, said in an interview. “This is the future for affordable housing.”
The U.K. is only completing about half of the number of homes it needs, pushing up prices and rents. A portion of the money from the bond will be used to fund new pre-fabricated homes -- best known for their role in easing the country's postwar housing shortage. The money raised will also be invested in gilts.
The bond plan will be announced on Thursday at a China-British Business Council conference in Shanghai. The yield from the securities will be used to fund the students' tuition fees through bursaries.
Investor Visa
The proposal would allow Chinese bondholders to study in the U.K. via a Tier 1 investor visa, usually the preserve of wealthy foreign nationals who invest in gilts or British companies. The number of wealthy investors granted visas to live in Britain fell 84 percent last year after the government doubled the minimum investment required for the permit to 2 million pounds in November 2014.
Relations between China and the U.K. have thawed since the government approved the so-called Hinkley Point plan, allowing Electricite de France SA and China General Nuclear Power Corp. to build two nuclear reactors in southwest England.
The affordable home investments show that the Chinese remain serious about forming new bonds with the U.K., according to CBBC Chairman James Sassoon.
To contact the reporter on this story: John Ainger in London at jainger@bloomberg.net. To contact the editors responsible for this story: Eddie Buckle at ebuckle@bloomberg.net, Neil Callanan, Keith Campbell
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