WHAT ARE THE COSTS INVOLVED IN BUYING A HONG KONG RESIDENTIAL PROPERTY?
What Are The Deposits Required?
Deposits for standard acquisition of Hong Kong residential property are:
1. Initial deposit (5%) to be paid upon the signing of the Provisional Sales and Purchase Agreement
2. Further deposit (5%) to be paid 2 weeks later
3. Balance of 90% to be paid 6 weeks later
What Are The Standard Agency Fees?
1% of sales price is the standard Hong Kong agency fee, payable by both a vendor and a purchaser.
What Are The Current Stamp Duty Rates?
Stamp Duty is payable within 30 days after the signing of the formal Sales and Purchase Agreement.
1. Ad Valorem Stamp Duty
These AVD rates are now applicable to anyone buying residential property in Hong Kong as of 28th February 2024:
The New Ad Valorem Stamp Duty (New AVSD), Buyers Stamp Duty (BSD) and Special Stamp Duty (SSD) were implemented in parts in 2010, 2012 and 2016 to cool the market and were REMOVED in February 2024.
2. What were the New Ad Valorem Stamp Duty (New AVSD) (Effective Date: 5th November 2016 and cancelled on 28th February 2024?
If a Hong Kong Permanent Resident already owned a residential property in Hong Kong, they were liable to pay the New AVSD of 15% when acquiring a second residential property, regardless of the price. This also applied to additional car parking spaces bought separately:
3. What was the Buyers Stamp Duty (BSD) (Effective Date: 27th October 2012 and cancelled on 28th February 2024)?
A Non Hong Kong Permanent Resident or a Company buying a residential property in Hong Kong had to pay 15% of purchase price + New AVSD.
4. What was the Special Stamp Duty (SSD) (Effective Date: 20th November 2010, Updated 27th October 2012 and cancelled on 28th February 2024)?
Anyone owning Hong Kong residential property wishing to sell it within 3 years of purchasing it was subject to SSD. Additional stamp duty at rates of 5-20%, depending on how long they had held the property for before selling, was charged.
What Are The Associated Legal Fees?
Approximately 0.1% of the sales price for a standard acquisition of a Hong Kong residential property.
What Are The Recurring Costs Involved?
1. Management Fees
Management fees vary according to the number of units and the buildings facilities.
Every building has an Incorporated Owners Committee (IOC). They are responsible for ensuring the maintenance and upkeep of the premises. One of their main roles is to appoint a management company to ensure the smooth running of the premises. The IOC determines the Management Fees and these are payable on a monthly basis.
2. Government Rates
The Government rates are approximately 5% of the estimated annual rental and are payable on a quarterly basis.
They are determined by the Government with due adjustments to reflect any differences in size, location, facilities, standards of finish and management.
3. Government Rent
The Government Rent is approximately 3% of the rateable value of the property and is payable on an annual basis.
The Government rents are determined by the Government for the lease of the Government land on which the premises stand. All privately owned land in Hong Kong is normally held by the Government.
4. Property Tax
A Property Tax is payable if the property is rented to a Tenant. The annual amount payable is 15% of the annual rental.
The following deductions can be applied:
Government Rates
Mortgage interest payments for up to 5 years
Less a 20% statutory allowance for renovations/improvements.
5. Accountant
Whilst not totally necessary, some owners appoint an accountant whose annual charges amount to between approximately HK$10,000 to HK$15,000 per year. If you buy in a company name it is advisable, and an annual Business Registration Fee currently set at HK$2,250 will also be payable.
6. Insurance
If the property is purchased with a mortgage, it is mandatory to have an insurance policy in place. The Mortgage Bank will advise you of their particular insurance packages.
7. Utilities
Gas
Water
Electricity