Insight into Hong Kong buyer's stamp duty

The Hong Kong government's Buyer's Stamp Duty, a 15 per cent tax on property transactions imposed on non-permanent residents, is designed to cut speculation in the local property market. In particular, it is designed to cut speculation by mainland buyers.

Speculation? What speculators? One measure of speculation is confirmor sales, which is where a property owner resells a property before he has transferred legal title. It is flat flipping in its purest sense.

In the year to date, the proportion of residential confirmor sales reached a record low of 0.1 per cent. In other words, with speculators playing residential property an immaterial and miniscule part of the market already, action by this class of players would be next to nil.

Separately, according to Centaline data, the proportion of sellers who hold property for less than six months has fallen from 14 per cent in 1997 to a low of 0.2 per cent in the year to date.

Sellers holding for less than three years generate about 20 to 30 per cent of property sales.

Mainland buyers make up most of non-local buyers in Hong Kong, buying 31 per cent of new flats and one-third of new luxury properties.