Hotel scheme holds high risks for buyers who saved on stamp duty

Buyers of units in the Apex Horizon hotel may risk financial burdens despite avoiding stamp duties by making the controversial purchase, property experts warn.

This week property giant Cheung Kong sold 360 units at the hotel in Kwai Chung, which opened in 2009. The units are classified as commercial properties so buyers escape the extra stamp duties imposed on residential property transactions last year. In October the government imposed a buyer's stamp duty of 15 per cent of the purchase price of homes, payable by all non-permanent-resident buyers and those buying houses or flats through companies, in addition to the standard stamp duty of up to 4.25 per cent.

In a copy of a provisional contract seen by the Post a clause stipulates that the buyer of an Apex Horizon unit must "make monthly contribution to the hotel-management expenses". They are also obliged to pay a monthly contribution to "hotel-operation expenses".

Investor Ip Chiu-fai, who paid more than HK$3 million for a 660 sq ft hotel unit in the Apex on Tuesday, said he was aware that ownership would incur expenses but hoped that this would be exceeded by rental returns.

"Even if the return can't be as high as HK$14,000 per month, I can hope for HK$10,000 or HK$8,000 - which will still be better than depositing my money in the bank," he said. "After all, I still own a unit I purchased at a lower-than-market price of about HK$5,000 per sq ft."

His agent had told him that he could live in the unit by paying a monthly rental of about HK$14,000, which would be refunded, in order to comply with the hotel's licensing agreement, he said. However, he has no plans to live in the unit himself.