Buying Property in Hong Kong
The following is an example of typical, approximate, costs in buying property in Hong Kong. For this sample, we assume the purchase price is HKD$7,000,000 and a deposit of 30% or more has been tendered (all amounts are in HKD):
| Stamp Duty @ 3.75% | 262,500 |
| Estate Agent Commission @ 1% | 70,000 |
| Legal Fees on Purchase & Mortgage | 21,000 |
| Legal Fees on Sale | 0 (a cost to the seller) |
| Search Fees (Land Registry) | 100 |
| Search Fees (Companies Registry) | 500 |
| Land Registration Fees | 1,400 |
| Filing Fees (for limited company) | 340 |
| Total of: $355,840 |
Please note: the above table assumes a minimum 30% deposit, therefore does not include mortgage insurance costs.
Stamp duty is required on all purchases of land in Hong Kong. The rate for property over HKD$6,7200,000 is 3.75% with lower rates applying to any sales price under this amount. Stamp duty is paid by the purchaser in almost every transaction. The payment of stamp duty on residential property is payable upon the Sale and Purchase Agreement, but the payment on non-residential property is not due until the Assignment, also known as the completion of the entire transaction, at which point the buyer takes possession of the property and is the new legal owner.
There are no regulations requiring the use of an estate agent, though, as common as they are in your home country, they are equally as common in Hong Kong. Foreign investors should employ the services of an estate agent to avoid unintentional illegal purchases, and for protection against potential fallouts if they are not fully knowledgeable of the real estate market in Hong Kong.
Many agents will request that buyers and sellers enter into preliminary agreements, which are binding upon signature and payment of non-refundable deposits. A purchaser would be wise to ensure that all the terms of the Sale and Purchase Agreement are finalized prior to signing the preliminary agreement otherwise the preliminary agreement should be "subject to contract". Estate agents charge an average of 1% commission to both the buyer and the seller; though this fee is negotiable.
Though not required, attorneys/solicitors are used in almost every property purchase transaction.
The solicitor will be used throughout almost every stage of the conveyancing transaction. The solicitor will investigate title and, following the signing of the Sale and Purchase Agreement, the buyer’s solicitor will draft the assignment which will be the actual purchase deed for approval by the seller’s solicitor.
The seller’s solicitor is responsible for discharging any outstanding mortgages on the property, while the bank’s solicitor will be responsible for drawing up any new mortgages for the buyer. However, the bank often appoints the buyer’s solicitor to draw up the mortgage.
Next: Stamp Duty
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ExpatFlats - Buying Property in Hong Kong
