Property cooling measures unfair to locals, Hong Kong lawmakers say

Housing officials are facing mounting pressure to scale back an anti-speculation measure that seeks to cool the market by taxing corporate property buyers more than private buyers.

At the Stamp Duty (Amendment) Bill 2012 committee meeting yesterday, legislators urged the government to allow companies set up by Hong Kong permanent residents to be exempted from the new buyer's stamp duty introduced last October. The rule demands overseas or corporate buyers of local properties pay 15 per cent of the price as tax on top of the existing stamp duty and a special stamp duty.

One of the most vocal critics of the measure, legislator Abraham Razack, who represents the real estate sector, said it discriminated against those who opted to hold properties through companies. "Hong Kong people should be free to choose how they own flats. It is unfair to punish those who want to own flats through companies," Razack said.

He hinted that the measure could be unconstitutional as it might breach the Basic Law stating all Hong Kong residents are equal before the law.

Razack proposed returning the tax to local corporate buyers if they did not resell the property or change ownership of the shares of the company within three years of the purchase.

It is common in Hong Kong for people to own flats through holding companies. Some speculators use shell companies to buy properties and then sell them in the second-hand market through a share transfer. The transaction would then be considered a company takeover.