London Luxury Home Broker Helping Chinese Buy with Bitcoin

A real estate agent in London’s red hot housing market hopes to sell more homes to Chinese buyers by handling transactions in the Bitcoin virtual currency.

According to a report in the South China Morning Post, fledgling UK home brokerage Cai-Capital, says it is the first agency in England’s capital to allow clients to pay for their properties in Bitcoin.

The move to the virtual currency is an attempt to help Chinese buyers work around their home country’s foreign exchange controls, which limit the amount of currency that an individual can move in or out of the country each year. By allowing potential buyers to acquire Bitcoins within China, and then transfer them online to Cai-Capital in the UK, the Bitcoin system would make it possible to avoid the currency controls set through banks.

However, while the Bitcoin gambit might allow Cai-Capital’s would-be clients to work around China’s currency restrictions, rules aimed at regulating Bitcoin use could pose other significant hurdles.

Following a speculative surge in purchases of the virtual currency last year, China’s government moved in December to restrict its banks from using Bitcoin as currency, citing concerns about money laundering and financial stability.

A notice curtailing financial institutions’ involvement with Bitcoin was issued by the People’s Bank of China and four other ministries and agencies, and the directive said the step was needed to “protect the status of the renminbi as the statutory currency, prevent risks of money laundering and protect financial stability.”

While China has not completely banned the currency, its popularity on local exchanges has been said to have dropped significantly since the moves by the bank authorities last year.

The move by the London agency follows the lead of a 115 year-old property brokerage in Sydney, which announced earlier this year that it would take payments in Bitcoin in response to demand from Chinese investors for using the high-tech payment system, and for the ability to reduce banking charges.

London, Sydney and other global gateway cities are enjoying record purchases of homes by Chinese investors in the last few years. According to a study released in March by Credit Suisse, Chinese buyers are expected to purchase US$39.54 billion worth of Australian residential property over the next seven years, and Reuters found in April that Chinese are now the top foreign buyers in the Manhattan market.