Cautious approach applied to property measures, Hong Kong housing minister says after stamp duty gap fix
Critics say move to finally stop exploitation of legal loophole in tax is overdue
Hong Kong’s housing minister has said that the government took a very cautious approach in designing cooling measures for the property market, as he explained the late decision on Tuesday night to finally plug a legal loophole open to exploitation by speculators.
The new cooling measure, which came into effect at midnight, means those buying several flats for the first time with just one sales and purchase agreement will now also have to pay 15 per cent stamp duty for each of the properties. Previously, such buyers were exempted from the levy.
Secretary for Transport and Housing Professor Anthony Cheung Bing-leung was asked on an RTHK radio program Wednesday morning if the move came too late – half a year after the 15 per cent stamp duty rate for non first-time buyers was introduced last November. Cheung said it was a matter of interpretation.
“When we introduced the [first] 15 per cent stamp duty, we hoped to keep other exemption arrangements the same. But later on we realised that some people tried to purchase several flats under one legal document to evade the tax,” he said.
Chief Executive Leung Chun-ying, together with Cheung and financial secretary Paul Chan Mo-po, announced the move to plug the loophole on Tuesday night.
Cheung said the government had all along been aware of the issue, but despite critical press coverage and mounting pressure to address the gap, time was needed to monitor the situation and gather data.
“We have adopted the most cautious approach to handling [the issue]. We did not leave the loopholes unattended,” he added.
Cheung said the percentage of cases involving multiple flats under one purchase only surged after the introduction of the increased stamp duty in November.
Among all residential property transactions in the city, the percentage of such cases increased to 4.7 per cent between December last year and March this year, up from about 3.4 per cent in 2013 and 2014.
Just last month alone, there were 184 such cases, involving 435 flats.
“Before November, such trends were not something to be concerned about,” Cheung said.
But lawmaker James To Kun-sun, who first warned of the loopholes in cooling measures back in 2013, criticised the latest arrangement as coming “too late”.
He added that the fix only addressed one gap in the property tax system, but others still exist. For example, some people may knowingly purchase a flat slated for redevelopment, so that they can be exempted from stamp duty on their next buy.