Extra stamp duties imposed on non residents buying property in HK

[emx]

A fresh round of measures to curb property prices will take effecto from tomorrow, the Financial Secretary John Tsang Chun-wah said today.

Despite a series of measures, including the special stamp duties introduced in 2010 to curb short-term speculation, home prices have surged amid an economic downturn, Tsang said.

"The property market is going aginst the economic fundamentals," Tsang said.
A new stamp duty will be imposed on non-permanent residents, after transactions by these buyers surged over the last few years.

Transactions by foreign investors accounted for 19.5 percent of deals thus far, compared with 13.7 percent in 2011 and 5.1 percent in 2010.

Home buyers without permanent residency, or those who purchase through a company, will have to pay a stamp duty at 15 percent of the home price.
Meanwhile, the existing special stamp duty will be modified, Tsang said.

A 20 percent levy will apply to flats sold within six months or less, while 15 percent will apply to those sold after six months but within a year of purchase. A 10 percent stamp duty will apply to apartments sold after a year but within 36 months of a deal.

This means that a non-resident buying a flat in Hong Kong and reselling it within 6 months, will incur a special stamp duty of 20 percent plus another of 15 percent.
Tsang said it was necessary to manage the supply-demand gap in local property market.

"Home prices have grown rapidly despite the economic slowdown," Tsang told reporters. "The risk of a property bubble is growing."

Some estate agents will be up late tonight!

[walkup]

Well it would certainly trump Singapore's 10%

[Ern]

My first thoughts are that mainlanders already with a property won't sell now. Takes those properties out of the market for some time. Could force the market up.

You can still buy and sell companies that own a property, so there's a back door there. Maybe a market for middleman residents or relatives to do the buying for mainlanders. Remains to be seen whether this will help the average HK homebuyer.

[Boris]

..... and what will happen will be as happened before. The buyer pays the tax in the purchase price so the seller gets his full wack of profit. Obviously no ex agent advisers working for this rocket scientist. Companies can right it off as a taxable expense I expect.

[walkup]

The experience of Singapore when they introduced a foreigner tax was that at first it did hold back prices, but now the markup has been 'priced in' and the upward trend has resumed. Any HK decision to impose 15% as opposed to the Singapore 10% will probably have been as a result of the Singapore experience and determination to make it work more decisively.

[HongKongMarc]

I guess discovery bay estate agents gonna be sweating now :P

[Mat]

End of the day the gvt and HK people in general do not care much for the 1 or 2% of "western" expat who buy property here before turining PR.

This measure is put in place (rightly/wrongly...time will tell) to deter mainland buyers - but you can't say Mianlanders can't buy in HK so you just put a heavy tax and you said non PR - as "simple" as that.