• Wed
  • Nov 19, 2014
  • Updated: 10:24am
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POLITICS

Law to affirm double stamp duty passed, 17 months after levy came in

The extra tax, which has been levied on almost all property purchases since early last year, voted into law before Legco’s summer break

PUBLISHED : Wednesday, 16 July, 2014, 4:15am
UPDATED : Wednesday, 16 July, 2014, 9:57am
 

Legislation doubling the stamp duty on most property purchases was finally passed by lawmakers last night, just before the Legislative Council enters its three-month summer recess.

Of the lawmakers present, 49 voted for the bill while seven voted against it.

Under the measure, which is designed to help cool the property market, buyers of all properties valued at HK$2 million or more will pay double the normal stamp duty, up to a ceiling of 8.5 per cent.

The double duty has been collected on transactions since February last year, but will only now be paid to the government with the passage of the law.

Secretary for Financial Services and the Treasury Professor Chan Ka-keung said he was happy the legislation had finally passed. He said it would be reviewed in the next 12 months to see if any adjustments were needed.

Lawmakers voted down an amendment that sought to allow corporate buyers a refund of the extra tax on properties they used for their own business, provided they kept it for three years.

Originally proposed by Kenneth Leung of the Professional Commons, it was taken up by fellow group member Charles Mok because Leung could not attend.

Mok said big companies might be able to afford the extra duty but it would be very difficult for small companies to pay.

Liberal Party lawmaker Felix Chung Kwok-pan said he knew a businessman who wanted to buy a 3,000 sq ft property for his business at a cost of HK$15 million, on which the stamp duty would be HK$600,000.

"He is willing to pay, but if the government exempts him from it, that will be a kind of support for businessmen," Chung said.

Another amendment, tabled by Liberal Party lawmaker Tommy Cheung Yu-yan, was also voted down.

Under the bill as originally proposed, second-home buyers who sold their old property within six months of signing a formal agreement to buy a new one would be entitled to a refund of the extra duty.

Cheung sought to extend this to a year, saying it would allow more people to move from small flats to bigger flats. "If they don't sell their flats, where do we get all these small flats for the first-time buyers?" he said.

But other lawmakers, including People Power's Raymond Chan Chi-chuen, said that the amendment would allow speculation.

While the amendment was defeated, Professor Chan made a concession under which the six months would start from completion of the purchase of the new home instead of the signing of the provisional agreement to purchase, allowing buyers more time to sell their old flat.

Yet another amendment, put forward by Democratic Party lawmaker Wu Chi-wai to exempt public housing tenants who are not permanent residents and want to buy the flat they live in under the Tenants Purchase Scheme, was passed.

Professor Chan told Wu there were only 60 such cases, many of them widows or children of dead Hong Kong tenants. Wu said that even so, if the amendment was not approved, "they will have to pay double stamp duty, which will have a huge impact on them". He said such resale restrictions meant such purchases could not be for speculation.

 

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This article is now closed to comments

mr.lobster
In hindsight, double duty will be shown to absolutely necessary. Otherwise more speculative home owners will burn coal.
mr.lobster
End of quantitative easing in Oct. Mortgage rates going up soon. Market will deflate if not crash.

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