Opinion | The political message of Hong Kong’s proposed vacancy tax speaks louder than its efficacy in bringing down home prices

Some cities in Australia and Canada have introduced some sort of vacancy tax to motivate owners to put their homes for sale or rental on the market.

Vancouver, a city which Hong Kong people are very familiar with, introduced a tax, equivalent to 1 per cent of the assessed value of a property deemed to vacant for more than 180 days. The tax was introduced two years ago when 5 per cent of Vancouver’s homes either stood empty or were underutilised, amid skyrocketing prices and soaring rents.

Although some success has been noted, the city government is seriously considering further raising the tax because owners continue to hold onto their properties and pay the tax in anticipation of ever-rising rentals.

To solve Hong Kong’s housing crunch, the city’s government is introducing a similar tax to spur supply, which is now being scrutinised by the Housing Panel of the Legislative Council (LegCo). Unlike Vancouver’s tax aimed at private individual owners who keep their properties vacant, Hong Kong’s levy targets only the developers’ first-hand residential flats.

According to Hong Kong’s government, developers will be subject to a tax twice the rateable value of each newly completed residential unit deemed unsold for more than a year, or unleased for more than 6 months at or above the going market rate after an occupation permit is granted.