Greedy Hong Kong landlords lick lips over rental idea
In a city where property owners get all the perks, finance chief Paul Chan can think again over tax breaks for those who rent as they will be forced to pay more anyway
Homeowners in Hong Kong get all the tax breaks while renters are left to their own devices. Finally, the government may be listening to the latter. But don’t get your hopes too high; it may end up benefiting landlords and push rents even higher.
Financial Secretary Paul Chan Mo-po was telling people this week about tax rebates for renters, saying the government was actively considering the idea, though it wasn’t ready to be included in the latest budget.
It’s a good idea on paper. Why should the taxman reward property owners over renters? But there have to be proper safeguards, and Chan doesn’t seem to want them.
Chan offered few details such as the scale of the suggested rental deductions being considered, but acknowledged the heavy financial pressure from the city’s rising rents.
According to the Rating and Valuation Department, the average rent for a private flat of 430 sq ft to 753 sq ft is HK$38 per square foot on Hong Kong Island, HK$33 in Kowloon and HK$24 in the New Territories.
The numbers are among the highest on record. But renters get no tax breaks, and many are complaining.
For those who own flats, the new budget will waive rates for one year, subject to a HK$2,500 cap per quarter. This doubled last year’s waiver and will benefit owners of 3.25 million properties across the city.
Our billionaires and multimillionaires hardly need the generosity of the government, but hey, this is Hong Kong.
Chan’s excuse for handing no “sweetener” to renters is that to do so would need an updating of the computer system at the Inland Revenue Department, whatever that means.
So it sounds like it’s a serious idea, and may be coming for renters in the next financial year.
But, you know landlords in this town. They don’t like long leases and have a tendency to raise rents at the end of every lease. If Chan does go ahead offering rental tax breaks, you can be sure most landlords would want their pound of flesh. And they would know exactly the tax breaks their tenants would be getting, so the whole exercise could push rents up even higher.
The only way the government can make it work is to make it tougher to evict tenants and impose some form of rent control, which Chan has already rejected out of hand.
Don’t do it if you can’t do it right.