Property developers blast ‘unfair’ vacancy tax, call for longer grace period for flats that don’t sell

An association that represents the city’s major developers blasted the vacancy tax introduced Friday as “unreasonable” and “unfair”, urging the government to grant a grace period for flats that have been put on the market but fail to find buyers immediately.

“The government should allow developers more time to sell stocks of flats, especially large flats that could not be sold in a short period of time,” said Stewart Leung Chi-kin, chairman of the Real Estate Developers Association’s executive committee (REDA).

Chief Executive Carrie Lam Cheng Yuet-ngor on Friday evening announced details of the vacancy tax for newly built flats that remain unsold.

The tax applies to all newly completed flats that had been left vacant for six months in a year. Flats are considered “completed” one year after obtaining an occupation permit.

The proposed tax would be equivalent to two years of rental income, calculated by government specialists and based on market rates. Analysts said the tax rate is equivalent to about 4 to 5 per cent of the value of the vacant property. The proposed tax needs Legislative Council approval before implementation.