Exclusive | Looming vacancy tax is prying long-held flats from Hong Kong developers who kept them locked away for future appreciation riches
Developers have sold 1,677 empty flats – some luxury ones held empty for more than a decade – in a scramble to avoid paying a big penalty. That is 12 per cent of all flats sold in a 10-week period
Hong Kong’s tax on empty flats appears to be working.
The city’s cash-rich developers had hoarded more than 9,000 new flats as of June 29, according to government data, when the vacancy tax was first proposed. Some of the flats had been held for more than a decade. The developers rightly assumed the prices would shoot up through the stratosphere if the flats were held and later sold as new.
But in just over two months, facing the threat of a humongous tax bill for hoarding that is blamed in part for why Hong Kong is the least affordable place on the planet to buy a home, they scrambled and sold about 1,677 of those flats.
That’s a lot of flats.
Between July 1 and September 19, 13,570 flats were sold in the city, a figure that includes resold flats and flats under construction but available for purchase. That means about 12 per cent of the total sold flats had been hoarded properties.
The threat of the tax, proposed by Chief Executive Carrie Lam Cheng Yuet-ngor and expected to be passed by the Legislative Council next year, also appears to be pushing developers not to hoard properties still being built but eligible to be sold.