15 per cent stamp duty
To rein in the city's runaway housing prices, Hong Kong's Financial Secretary John Tsang Chun-wah announced an additional 15 per cent stamp duty on non-permanent-resident and corporate buyers starting from October 27, 2012. The move prompted speculation over the effectiveness of taxation on the real estate market and criticisms that Hong Kong was turning away from its roots as a free market economy in favour of a more protectionist market environment.
Flat agent's rapid action sees clients save millions by avoiding new tax
"An inch of time is an inch of gold" is the motto that drives Midland Realty director Sammy Po Siu-ming.
So Po got to work the instant Henderson Land Development told him it would launch sales of flats at a development in Yuen Long at 6.30pm on Friday - just 30 minutes after Financial Secretary John Tsang Chun-wah unveiled measures taking effect at midnight that night to curb property speculation.
Henderson brought forward the official launch from Saturday.
"The new tax rules mainly target mainland buyers. But we went to work immediately because if we got preliminary sale-and-purchase agreements signed before they came into effect at midnight on Friday, our buyers escaped the new tax," he said.
So the real estate agency mobilised about 400 agents to call customers, particularly mainland buyers, and encourage them to rush to the Tsim Sha Tsui sales office of The Reach to sign contracts before midnight.
"Fortunately, most of the mainland buyers are businessmen and they have cars. They immediately set off for Hong Kong. For those mainlanders and local buyers without cars, we provided free transport to get them to the sales office as fast as possible."
Po said the last of the night's customers turned up about 11.30pm and bought a unit. "As a result of our quick response we managed to help about 100 buyers sign their deals before the deadline," he said.
Buyers were quick to respond because of the savings.
Po said someone buying an apartment at The Reach would have had to pay an extra HK$600,000 if they had bought a HK$4 million flat after the extra 15 per cent tax on non-permanent residents took effect.
Po said that since many buyers had reserved flats a week before the official launch, all they needed to do was sign a preliminary sale-and-purchase agreement with the developer.
"With the original official sale set for Saturday, some mainland buyers had arrived in Hong Kong on Wednesday or Thursday for shopping. That's why it was easy for us to conclude the deals so quickly," he said.
Henderson Land said on Saturday that it had generated HK$1.3 billion from the sale of 300 flats at The Reach on Friday.
Wilson Chan, manager at Centaline Property Agency's Grand Promenade branch, said a mainland buyer rushed to sign a preliminary agreement for a HK$11.3 million flat at Grand Promenade in Shau Kei Wan before the deadline.
"As a result the buyer saved HK$1.69 million in additional new stamp duties," he said.