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  • Dec 18, 2014
  • Updated: 12:02pm
NewsHong Kong

Property sector turns to radicals in tax fight

Agents seek support of lawmakers known for blocking tactics in bid to stop stamp duty bill

PUBLISHED : Monday, 16 September, 2013, 12:00am
UPDATED : Monday, 16 September, 2013, 5:17am

The real-estate sector is turning to radical politicians in their fight to block the government's anti-property speculation bill that seeks to cool the housing market through increases in stamp duty.

An alliance of major property agencies will this week meet four opposition legislators from People Power, the League of Social Democrats and NeoDemocrats - lawmakers known for previous bids to block or delay debates in the legislature.

One of the leaders of the alliance, Pierre Wong Tsz-wa, who is managing director and executive director of Midland Holdings, said: "We do not like property speculation either, but the government measures punish only the buyers. The legislators should not let a flawed bill pass."

At the centre of the controversy is the Stamp Duty (Amendment) Bill 2012, which seeks to create a new buyer's stamp duty - a special tax that applies only to corporate or overseas buyers and which would be set at 15 per cent of the property transaction price.

The bill is still being examined by a Legislative Council bills committee, which is to meet again today. The proposed measures, if enacted, will have retrospective effect from October 27 last year.

Since they were announced in October, cooling measures have had a notable impact on transaction volumes, although prices have remained high.

According to Wong, sales of homes in the city's 15 biggest housing estates were in the single digits the past six weekends, while transactions in the secondary market have fallen from an average of 10,000 a month to about 3,000.

Although a final vote on the bill is not expected until the end of November at the earliest, housing minister Professor Anthony Cheung Bing-leung has intensified efforts to secure lawmakers' support, as there have been signs that previously solid support from some major political parties could waver.

Cheung, who met lawmakers from the Democratic Party and Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) last week, is expected to meet Civic Party legislators this week to lobby for votes.

Two pro-business parties - the Liberal Party and Business and Professionals Alliance - have vowed to block the bill.

Business and Professionals Alliance lawmaker Abraham Razack, who represents the real-estate sector in the legislature, has plans to amend the bill so that local corporate buyers would be exempted from the stamp duty.

"Why does a Hong Kong resident not need to pay the special stamp duty if he purchases a flat under his own name, but has to pay a huge tax if he sets up a company to buy the flat? It is just because the government presumes anyone who uses a company to own flats is an evil speculator," Razack said.

His views were echoed by Liberal Party leader James Tien Pei-chun, who has plans to amend the bill to include a sunset clause.

The Democratic Party has asked the government to consider exempting charitable organisations from the stamp duty.

Chief Executive Leung Chun-ying has so far stood firm against easing the cooling measures.


More on this story

Cooling measures 'not negotiable'
15 Sep 2013 - 12:00am

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This article is now closed to comments

If a HK resident wants to buy a flat for investment purposes, he/she can use his/her own name. Comments from both Abraham and James are full of sxxx! Affordable Housing is a NECESSITY and NOT a commodity! An average HK wage earner just can't afford to own or lease a decent place to call it a home with today's flat prices and rents!
When a company buys a flat, can it live in the flat? It's either for speculation, 'investment', or as a tax expense.
Hard to feel bad for these realty guys - I've had to move twice in the past year, and I'm amazed at all the deceit and lies I've encountered with probably 80% of the agents that have shown us flats (we looked at probably 30-40). The agents give a lot of untrue info on the places, and after looking at 2-3 places which are unsuitable, their attitudes often changed for the worse as well. They've had their money making run, and should go get a job selling cars or clothes.
Abraham Razack is either missing the point or disingenuous. The very purpose of a company is for investment or speculation or profit making. There is no need for a homeowner to purchase a home through a company if the purpose is for self use.

Moreover, the whole point of purchasing property through a company is to greatly minimize stamp duty on subsequent transfers (I may be wrong on this), since the rate of stamp duty on selling property is quite different from the rate of stamp duty on selling shares of a company. Therefore, there is little need for an exemption for companies.
They should introduce more measures then not just aimed at the buyers, but also at the sellers too.. That would make it fair right, Mr Pierre Wong? Maybe a capital gains tax on real estate sales?
As the current situation persists with the prices of flats. They do not have my support.
Sometimes people use corporations in order to buy flats in a discreet manner. A corporation protects the individual buyer's privacy.

Anyway I would like to see the property market crash pretty hard. HK needs a correction.


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