• Sun
  • Sep 21, 2014
  • Updated: 10:32pm

15 per cent stamp duty

To rein in the city's runaway housing prices, Hong Kong's Financial Secretary John Tsang Chun-wah announced an additional 15 per cent stamp duty on non-permanent-resident and corporate buyers starting from October 27, 2012. The move prompted speculation over the effectiveness of taxation on the real estate market and criticisms that Hong Kong was turning away from its roots as a free market economy in favour of a more protectionist market environment.

 

NewsHong Kong
HOUSING

Stamp duty keeping non-locals out of property market

It's too early to conclude that cooling effect was short-lived, say analysts, as property prices in the secondary market hit a new record

PUBLISHED : Saturday, 16 February, 2013, 12:00am
UPDATED : Saturday, 16 February, 2013, 8:48am
 

Poll

  • Yes: 14%
  • No : 56%
  • Too early to tell: 30%
16 Feb 2013
  • Yes
  • No
  • Too early to tell
Total number of votes recorded: 431

The new 15 per cent tax on non-local and corporate property buyers has put many of them off the housing market, but sales volumes and prices have rebounded in the two months since it took effect, the latest figures show.

While observers believe it is too early to say for sure if the cooling effect was short-lived, they argue that locals buying through firms should be exempted from the tax, as figures show few speculators use companies to evade tax.

On October 27, the government imposed a new stamp duty of 15 per cent on non-locals and companies buying homes. It also raised by 5 percentage points an across-the-board "special stamp duty" on sellers to curb speculation, and extended its effect on resales from two to three years. Duty of 10 to 20 per cent of the price is payable if a property is resold in that period.

Between then and the end of January, 620 residential transactions were recorded as chargeable. Of these, 166 involved people not holding Hong Kong permanent residency - well below the 2011 monthly average of 458.

A further 454 involved company buyers. The market share of such buyers shrank from 12 per cent of all residential property transactions in November to 3 per cent last month. Despite this, sales rebounded last month to 7,136, from 3,951 in December.

The sales figures were given to lawmakers by the Transport and Housing Bureau, as a Legislative Council committee continued to vet the bill on the tax, which will take effect retroactively if passed.

The CCL property index issued by Centaline Property, which tracks prices in the secondary market, hit a new record of 121.73 points yesterday.

Willy Liu Wai-keung, chief executive of property agency Ricacorp, said the figures did not mean the new duty had proved ineffective in cooling the market.

"The total number of deals last month, 7,136, is not a high level compared to the peak in the past two years, when you had more than 10,000 deals a month at some points," Liu said.

He said the industry was wondering if a post-Lunar-New-Year boom would occur this year.

Institute of Surveyors housing panel spokesman Dr Lawrence Poon Wing-cheung also said it was too early to conclude that the tax had had little effect.

"Without the buyer's stamp duty, there could have been even bigger increases in sales volumes and prices," Poon said.

Meanwhile, the Housing Bureau reiterated that permanent residents who buy flats via companies would not be exempt from the duty, because of possible tax evasion through share transfers. However, the bureau paper showed only 29 buyers had been penalised in the past two years for using share transfers to speculate and avoid paying profits tax.

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4

This article is now closed to comments

honkiepanky
What's amazing is that the number of non-PR and company buyers only dropped by around two-thirds. I guess the remaining one third consists of the truly motivated money launderers.
donniemcm
It just means that there are other factors that keep it rising.
And please don't fall for companies request to not pay the ssd.
Most of the buyers are investors and companies.
Why we don't have statistics about percentage of individual purchase and non-individual.
HK-Explorer
Of course the measures the government have taken work and continue to work. People complained before that prices were going up because of non permanent residents buying up all the property and it were just HK people buying then the price would not rise as much.
The people spoke and the government followed and foreigners are not buying HK property anymore. That was the wish and it is done. So only HK people are buying and the price is rising. But at least you can say it is HK people gaining from the purchase.
Sit Bo Lei
Interventions of this sort by governments anywhere to achieve political objectives by introducing market distorting taxation have unintended consequences which make the introduction of such legislation silly. If the SAR government wishes to avoid this the Stamp Duty changes should not take place.
 
 
 
 
 

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