UK developer offers stamp duty subsidies in London project
Euroterra seeks to mitigate tax change impact as London luxury project goes on sale in HK
Stamp duty subsidies are not only a popular tactic for Hong Kong developers to draw buyers to new projects, but they have also become an incentive for a British developer to lure Asian buyers.
Euroterra Capital plans to offer stamp duty land tax incentives for buyers when its London luxury project, Royal Residence, goes on sale in Hong Kong over the weekend.
The developer would pay the difference in the old and new tax systems on up to 2.35 per cent of the price of the properties, said Neil Jensen, the head of operations for Asia at Fraser & Co, which markets the project.
Previously, the tax was charged at a single rate for the entire price of a property. From December 4 last year, the British government charged the levy at increasing rates for each portion of the price.
For instance, nothing is charged on the first £125,000 (HK$1.4 billion) of the property price, then 2 per cent on the next £125,000. The maximum rate of 12 per cent is levied on the portion above £1.5 million.
Under the changes, those buying residential property for £937,500 or less will pay the same or, in most cases, less tax than they would have paid under the old rules.
Generally, buyers of property of more than £937,500 will pay more. But less tax will be levied on property with a price tag of £1 million to £1.125 million.
Royal Residence, which is within a five-minute walk of Hyde Park, comprises six units that measure 603 to 1,240 sqft. The five two-bedroom apartments range from £1.395 million to £1.855 million and the three-bedroom penthouse is available for about £2.6 million.
Take the most expensive unit as an example. Under the old rule, the stamp duty would have been £181,650, but it will become £225,150 under the new rule. Euroterra would pay the difference of £43,500, Jensen said.
It had not made much difference compared to the price of the unit at more than £2 million, he said.
"[The developer] feels good value of their flats. They do not want the stamp duty as a barrier for buyers," said Jensen. "They are happy to subsidise and make the payment."
But he said it was difficult to say if it would become a trend as only luxury units would be affected.