Hong Kong

Cooling the Hong Kong property market

March 1, 2015 — Over the past five years, the government introduced a series of measures with the goal of cooling the Hong Kong property market.

Here is a chronology of the policy changes and tax increases that were  introduced between April 1, 2010, and February 27, 2015.

2010: Stamp duty increase

On April 1, 2010, the rate of stamp duty was increased to a maximum of 4.25% for homes valued above HK$21,739,120.

2010: Special stamp duty introduced

On November 19, 2010, a special stamp duty was introduced to discourage speculators from “flipping” property. The tax rates were:

  • 15% if the home was held for six months or less
  • 10% if the home was held for more than six months but less than 12 months
  • 5% if the home was held for more than 12 months but less than 24 months

2010: Maximum LTV ratios cut

On November 19, 2010, the Hong Kong Monetary Authority (HKMA) issued a circular lowering the maximum loan-to-value (LTV) ratios.

  • For homes valued at more than $12 million, the LTV was cut to 50%
  • For homes valued between $8 million and $12 million, the LTV was cut to 60%, with a maximum loan size of $6 million
  • For homes valued at less than $8 million, the LTV was kept at 70%, but the maximum loan size was lowered to $4.8 million
  • For non-owner–occupied residential properties, for properties purchased by a company and for industrial and commercial properties, the LTV was capped at 50% regardless of the property’s price

2012: Buyer’s stamp duty introduced

On October 26, 2012, the Hong Kong government introduced a buyer’s stamp duty on the purchase of Hong Kong residential property by any person—including local and foreign companies—who is not a Hong Kong permanent resident. The 15% duty is charged on top of the regular stamp duty and special stamp duty, if applicable.

2012: Special stamp duty increased

On October 26, 2012, the Hong Kong government increased the special stamp duty that was first introduced on November 19, 2010. The rates were increased to:

  • 20% if the home was held for six months or less
  • 15% if the home was held for more than six months but less than 12 months
  • 10% if the home was held for more than 12 months but less than 36 months

2013: Stamp duty doubled for nonresidents

On February 22, 2013, the government effectively doubled the stamp duty payable by buyers who are not H0ng Kong permanent residents, and by permanent residents who already own one or more properties. The new rates, which also apply to local and foreign companies, raised the maximum stamp duty to 8.50% for homes priced above $21,739,120. Current stamp duty rates are available here.

2015: LTV rates cut again

On February 27, 2015, the HKMA cut loan-to-value ratios again. The maximum LTV is now capped at 60%, with a maximum loan size of $5 million. Maximum LTVs for a residential property that is not the buyer’s primary residence, for transactions where the majority of the buyer’s income is earned outside Hong Kong, and for purchases of commercial and industrial property are considerably less. For example, the maximum LTV for the purchase of parking space is 20%. The HKMA’s current lending guidelines are available here.

Unfortunately, these attempts at cooling the Hong Kong property market have had little effect. In 2015, home prices throughout Hong Kong remain significantly higher than they were in 2010.