New 15pc stamp duty for buyers with existing flats a welcome move
Reading about the perils of rising rents and stratospheric home prices in Hong Kong has become a daily routine.
Half of Hongkongers are not homeowners and an average of 19 years of median disposable household income is needed to buy an average home. Many are forced to rent forever, becoming rental slaves – literally working for the landlords. It is estimated that over 200,000 households live in squalid subdivided flats and some even in cage homes.
Existing land laws, landlords, developers, officials and other vested interests have caused an artificial shortage in housing.
There’s nothing “free markets”, humane or rational about the fact that housing is out of reach for the average middle class.
Landlords borrow against existing homes, driving prices even higher and contributing to wealth inequality. Developers also come up with ingenious financing schemes – bypassing the Hong Kong Monetary Authority. Wealth has flowed into and been stored in property, instead of productive investment.
The trend of micro-flats being built indicates that society has not benefited from existing policies. The easy way out is to blame China , Chief Executive Leung Chun-ying and the lack of democracy in Hong Kong. Note that America is a democracy but its huge wealth gap is encouraging political extremism.
Business groups, on the other hand, quote globalisation, quantitative easing or low interest rates (from the US dollar peg), as if to assert that “nothing can or should be done”.
I strongly support Leung’s administration for further intervening in the property market, by imposing a 15 per cent stamp duty on non-first-time home buyers. Developers have now delayed new launches; an indication that most buyers are existing property owners.
The focus should be on helping first-time buyers, to provide affordable housing for real end-users instead of fulfilling the investment needs of both local and foreign buyers.
I propose more corrective measures, such as a yearly wealth tax of 10 per cent on non-primary residences. This would spur flat owners to sell, increasing immediate supply.
Also, a property inheritance tax should be enacted, substituting a high land price policy. Property or land leases should also be restricted to 99 years, as Singapore does, for the benefit of the next generation.
In Hong Kong , we protect the rich landlords but tax future generations and non-homeowners with high prices.
In a zero-sum game reality, today’s high property prices benefiting current landlords will be the curse of tomorrow’s generation. There is nothing inhumane or undemocratic about taxing the rich as developed countries do.
Bernard E. S. Lee, Tsuen Wan