Concrete Analysis | Pay close attention to stamp duty when buying property in Hong Kong
- Since property transactions usually involve large sums of money and buyers bear the cost of stamp duty, they are advised to carefully research what category they fall under and not just rely on property agents
I would like to share a case regarding stamp duty liability so as to remind both property agents and consumers of the importance of understanding the types and amount of stamp duty payable before entering into any provisional agreement for sale and purchase.
An agent introduced an industrial property to a prospective buyer. When asked about the ad valorem stamp duty payable on the transaction, the salesman told her that she did not have to pay any stamp duty if she sub-sold the property as confirmor before completing the purchase.
Based on the information, she went ahead and signed a provisional deal.
Later, upon signing the formal agreement for sale and purchase, the buyer was advised by her lawyer that regardless of whether she sub-sold the property as confirmor or not, she was still liable to pay the stamp duty for buying the property. The buyer asked the salesman about it again who realised that he had made a mistake. She did not complete the transaction and her deposit of more than HK$200,000 (US$25,500) was forfeited to the vendor.
The disciplinary committee of the Estate Agents Authority (EAA) was of the view that the salesman made a misrepresentation on the ad valorem stamp duty. He was in breach of paragraph 3.7.2 of the Code of Ethics issued by the EAA, which stipulates: “Estate agents and salespersons should avoid any practice which may bring discredit and/or disrepute to the estate agency trade.”