• Thu
  • Dec 25, 2014
  • Updated: 11:40pm
NewsHong Kong

Mass rally planned against controversial property market cooling measures

Lawmaker urges government to drop loophole that would see flat buyers not having to pay higher duty if purchase is in name of offspring

PUBLISHED : Monday, 24 February, 2014, 11:44am
UPDATED : Tuesday, 25 February, 2014, 11:50am

A lawmaker has urged the government to drop a loophole that allows property buyers to avoid higher stamp duty by buying flats in their children's name.

The bill exempted first-time buyers under 18 from the double stamp duty, a provision their parents or guardians could abuse, Democratic Party legislator James To Kun-sun said.

"An adult can make use of this exemption as a loophole," To said. "Why does the government not eliminate this exemption, as it did [when it was included in] the bill on buyers' stamp duty?"

Mainlanders with Hong Kong-born children can also enlist the exemption.

To urged the government to plug the loophole and a few others before the law was passed.

To was speaking at a Legislative Council bills committee meeting to scrutinise the Stamp Duty (Amendment) Bill 2013. The tax took effect a year ago as an initiative to cool the market.

Since February 23 last year, buyers of properties worth more than HK$2 million incur stamp duty at rates at least double those before that date unless they are permanent residents buying their first home.

The new rate ranges from 1.5 per cent to 8.5 per cent, depending on the cost of the property.

The old rate was between HK$100 and 4.25 per cent.

Non-locals as well as companies must pay the new rate, plus a buyers' stamp duty of 15 per cent.

Mable Chan, deputy secretary for financial services and the treasury, did not consider the exemption a loophole, although she acknowledged it could allow parents to take advantage.

"I understand the concern," Chan said. "But [if the buyers are not locals] they already have to pay the buyers' stamp duty, so we do not want to further penalise them."

The buyers' stamp duty came into force on Saturday, along with a special stamp duty of 10 to 20 per cent on quick resales. Lawmakers are now moving on to the double stamp duty bill.

Both bills fall under a system of "negative vetting", which allows the government to levy a tax before receiving approval.

Pro-establishment parties support the government's increase of stamp duty as a tool to cool real estate prices, while pro-business lawmakers object to it as market interference.

Outside the Legco building, about 300 property consultants, surveyors, site workers and others in the industry staged a protest against the new taxes.

The buyers' stamp duty "is not the end of the story. There is still another bill about market-cooling measures being examined by lawmakers," said Raymond Ho Man-kit, spokesman for the group, which called itself the Alliance of Victims of Government's Harsh Measures.

"We are not against anti-speculation. But the measures are so harsh that layman investors are also affected."

The alliance said it had collected about 150,000 signatures on a petition that it had handed to the government.

The alliance warned that more than a third of estate agents could be thrown out of work if the government refused to scrap its market-cooling measures. Estate Agents Authority data shows the number of estate agents has fallen for nine consecutive months.

The city had 35,645 agents last month, down from 37,173 in April.



Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive



This article is now closed to comments

charge them rent at vulture market rate for the area they occupy for their protest
report all Mainlander property transactions back to the Mainland Government to verify the status of the funds used were not black money or tax evasion
Impose a compound rates tax on empty apartments / houses
Govt should open a database of for sale & wanted property to et buyer / seller interaction without these vultures
Suggestion - learn something more than just stand around on weekends trying to convince people to buy property.
Learn a skill that allows you to build something and help others instead of just standing around in a crappy suit in shopping centers; you'll find that life will be more meaningful.
Instead of demonstrating, these goons should go find themselves a real job.
If theres one thing CY & his goons did right, its this. Credit to them.
I agree with the database of for sale and wanted properties. All the agencies pretty much have the same listings. I've found the value-add of most real estate agents to be nil. It's not in the best interest of the agent to get you the best price. In fact, it's contrary. Agents will always convince the seller to take a lower price and the buyer to increase their bid, with the aim to do a quick transaction.
The market is paying a 2% transaction fee for information that should be easy to obtain. There's an opportunity for a creative new market entrant to lower transaction fees while providing better services to customers.
I think Mainland or any foreign buyer can buy as they wish, but make the statistics public. I am pretty sure that a significant portion of foreign buyers are buying way above market. I wouldn't be surprised if many of those foreign buyers are getting kick-backs. This is a rigged market, not free market.
Can SCMP do some investigative reporting?


SCMP.com Account