Concrete Analysis | Hong Kong’s stamp duties have worked to stabilise the housing market, shielding us from speculative excess
Without administrative controls in the form of stamp duties, debt levels would be sky high, financing ineligibility would be rife and affordability would be worse than it is now
It’s been said there are only two sure things in life: death and taxes. Since November 2010, the Hong Kong government has implemented roughly half a dozen new or amended property stamp duties, and on top of that the Hong Kong Monetary Authority raised the loan-to-value (LTV) ratios three times. Anyone purchasing a second property is required to come up with 60 per cent of its sticker price (based on bank valuation). And then even permanent residents can expect to be slapped with up to an additional 15 per cent stamp duty, while a 30 per cent tax is to be levied on non-permanent residents.
On a HK$30 million (US$3.82 million) property, a permanent resident pays a whopping HK$4.5 million or 15 per cent stamp duty if it's a second home, the amount enough to buy a parking space.
For non-permanent residents, an additional HK$9 million is added, equivalent to what a new flat cost in Yoho Town.
This in addition to HK$15 million to HK$18 million as a down payment.
According to standard mortgage rules, flats costing more than HK$10 million will receive a loan-to-value ratio of just 50 per cent, while 40 per cent is added for non-permanent residents. But it is only for applicants without the outstanding mortgage.
