HONG KONG: Three years ago the stamp duty paid by property purchasers in Hong Kong rose from 4.25 per cent to 8.5 per cent for residents where the amount or value of the consideration exceeded HK$2 million. For foreign buyers, the stamp duty was set at 15 per cent.
In November 2016, the rate for all second-home buyers, private or corporate, shot up to 15 per cent, irrespective of the amount or value of the consideration. Only first-home-buying permanent residents of Hong Kong can avoid the increased charge.
It’s a tax that makes sense in what is broadly agreed to be the world’s least affordable city. Sydney and Vancouver, the other two real estate hotspots, have got nothing on Hong Kong, where residential home prices have more than quadrupled in the last two decades.
The dramatic rise in stamp duty is partly intended to play a role in cooling the market and making life more affordable for the city’s residents, hence the increase in stamp duty for all and not just for foreign buyers. However, it has another important purpose – to keep investment dollars in mainland China.
“Since the middle of this year the stamp duty rise has been on the cards because there has been an anticipation of softening property prices in mainland China,” says Vic Edwards, professor of economics and finance at the China Youth University of Political Studies in Beijing and visiting fellow at the Australian School of Business, University of New South Wales.
“What they wanted to prevent was a sudden flood of Chinese investors buying properties in Hong Kong,” Edwards explains.
