transfer of property in hong kong

Hong Kong Housing Authority and Housing Department

HA 50th Anniversary , HOS 2023 , WSM 2023

Transfer of Ownership

Pursuant to the Housing Ordinance, change of ownership is restricted except for disposal in the Secondary Market after two years has elapsed since the first assignment, or in the open market upon payment of premium. However the Housing Authority (HA) may at its discretion and on the merit of each case give consent to a request for change of ownership under special circumstances.

The usual reasons for applying for a consent to change of ownership are:

Reasons other than the above listed will be considered only in exceptional circumstances.

• The personal data collected shall be used for the purpose of processing the application for transfer of ownership and, upon completion of the transfer, to be transferred to the Rating and Valuation Department and be used for issuing demand notes for rates / Government rent.
• The provision of personal data is voluntary. However, if the applicant does not provide sufficient information, the HA may not be able to process the application.
• The applicant has a right of access and correction in respect of his / her personal data. Enquiries concerning the making of access and correction of personal data may be addressed to "Departmental Data Protection Officer, Hong Kong Housing Authority Headquarters, 33 Fat Kwong Street, Homantin, Kowloon".
• The applicant is required to pay an administrative fee (currently at $2,850) at the time of submitting the application. The administrative fee is not refundable regardless even if the application is not successful or the applicant wishes to withdraw the application.
• The duly completed application form should be delivered to the relevant District Tenancy Management Offices.
• In general, the applicant will be informed of the result of the application within six weeks from the date on which all the required documents have been received by the Housing Subsidies Sub-division.

HOS applicants, who prior to execution of the assignment, need to apply for a change of ownership, can click the following link to download the Application Form for Change of Ownership and return the completed form to:

HOS Sales Unit Podium Level 1 Hong Kong Housing Authority Customer Service Centre 3 Wang Tau Hom South Road Kowloon Hong Kong

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• 3. If I want to sell or transfer my flat to a member of my family or a relative, what should I be aware of?
• You don't need an estate agent;
• You don't need to sign any provisional agreement;
• You still have to appoint a solicitor to handle the sale or transfer;
• If the person is a relative related to you by blood, marriage or adoption, one solicitor can represent  both parties  . Otherwise, you must appoint another solicitor to represent your relative;
• The stamp duty will be calculated according to the market price of the property if the purchase price is below the market price or if the property is  transferred as a gift  ( i.e. no purchase price is payable)  .  Please check with your solicitor or the  Stamp Office  for details of the calculation.

Choosing a subtopic

• 1. Am I holding a Government lease while owning a flat in a multi-storey building?
• 2. What are the different ways of owning a property? What is sole ownership and what are joint tenants and tenants-in-common?
• 3. Can I sell my property if I am one of the joint tenants/tenants in common?
• 4. I am not the "registered owner" of a flat although I have paid part or all of the money to purchase the flat.  Do I have a say in matters concerning the property?  Can I stop the "registered owner" from selling the property?
• 1. I want to sell my flat. What services can I expect from an estate agent?
• 2. As a vendor, must I sign an estate agency agreement when I ask an agent to help me sell my flat?
• 3. Can the same agent serve both the vendor and the purchaser?
• 4. Do I pay less commission if the same agent serves both the purchaser and me (the vendor)?
• 5. I want to buy a flat. What services can I expect and what information can I obtain from the agent who shows me a flat?
• 6. As a purchaser, must I sign an estate agency agreement when I ask an agent to show me a flat?
• 7. Do I pay less commission if the same agent serves both the vendor and me (the purchaser)?
• 8. What if I sign a 'Form 4' with an agent who shows me a flat, and later, I buy the flat through another agent or directly from the vendor?
• 9. What if I sign a 'Form 4' with an agent who shows me a flat, and later, someone related to me (e.g. my spouse) buys the flat through another agent or directly from the vendor?
• 10. Where can I go to make a complaint if I am not satisfied with my agent?
• 11. Before I buy the flat, I find out that my agent gave me false information or he forgot to tell me some important information about the flat. Can I terminate the provisional agreement and sue my agent (and his employer) for compensation?
• 1. I want to purchase a flat. What should I do before I sign the provisional sale and purchase agreement and pay the initial deposit?
• 2. When the property is sold with an existing tenancy, what should the purchaser and the vendor be aware of?
• 3. What are the usual terms that would be contained in the provisional sale and purchase agreement?
• 4. Should the provisional sale and purchase agreement be stamped and registered?
• 5. What should a purchaser be aware of if there is an existing mortgage on the flat before he/she signs the provisional sale and purchase agreement?
• 6. If a purchaser intends to buy a flat over which there is a negative equity (the purchase price to be paid cannot fully offset the outstanding mortgage loan), how can the purchaser deal with the risk?
• 7. What should a purchaser do if a mortgage is needed?
• 8. Can a purchaser re-sell the property after signing the provisional sale and purchase agreement?
• 9. Can a purchaser refuse to complete the purchase of a stigmatized property after signing the provisional or formal sale and purchase agreement?
• 1. What are the usual steps for signing the formal sale and purchase agreement and paying the further deposit?
• 2. I (as a purchaser) signed the provisional agreement but I want to add my spouse's name or my parents' names into the subsequent formal agreement. Can I do that?
• 4. Should I enter into a sale and purchase agreement or execute a deed of gift if I want to give my property to my husband/wife?
• 5. How much stamp duty is payable for the sale and purchase agreement for a residential property?
• 6. Is there any difference between 'residential' and 'commercial' properties as far as stamp duty is concerned?
• 7. Can the purchaser apply for deferring payment of stamp duty?
• 8. Should the sale and purchase agreement for the property be registered at the Land Registry? How much is the registration fee?
• 9. How much will I have to pay the solicitor for a property transaction? Is there a fixed scale?
• 10. What happens if there are discrepancies in the terms between the provisional agreement and the formal agreement?
• 11. If the vendor/purchaser anticipates that he will be out of Hong Kong and therefore cannot sign the formal agreement, what can he do?
• 1. If one party commits other wrongful acts, e.g. the vendor broke a small window in the kitchen, can the other party terminate the sale and purchase agreement or claim for compensation?
• 1. If there are some "new expenses" (e.g. repair costs for the relevant building) come out after the parties signed the formal sale and purchase agreement but before the completion day, should the vendor or the purchaser bear these expenses?
• Sale and purchase of Home Ownership Scheme (HOS) flats
• 1. Sale and purchase of property under construction is governed by either the "Consent Scheme" or the "Non-Consent Scheme". What are the differences between these two schemes?
• 2. If the developer/vendor fails to complete the building and hand over the flats to the purchasers on time, can the purchasers terminate the agreement and sue for compensation?
• 1. What are the functions of the Owners' Corporation and the building manager?
• 2. How to set up an Owners' Corporation?
• Case Illustration

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• How Can Transferring a Property to a Rel...

How Can Transferring a Property to a Relative Save Taxes in Hong Kong?

20 September 2019 - While Hong Kong's property market has certainly been affected by the recent uncertainties (both local and the broader trade war), the effect has not been as significant as some reports suggest.  August residential sales volumes were down 15% from July, 15% below August 2018 levels, and actually 60% higher than average monthly transactions in 3Q2018. There are people who remain confident in the long term and are investing opportunistically.  Nonetheless, volumes are certainly down from pre-protest levels. 

For those who are indeed looking to invest in properties, transferring a property to a close relative is a legal means of acquiring properties and avoiding taxes in Hong Kong.  After the Government implemented the double stamp duty in 2013, then increased the property stamp for second-home buyers to 15% in 2016, homeowners began transferring the title of a property from joint ownership to single ownership.  Doing so enables them to restore the “first-time purchaser” status for one party in order to re-enter the property market without triggering the 15% additional tax.

Notably, a study by QFang indicated that transactions involving close relatives constituted over 10% of the second-hand residential transactions in the first seven months of the year.  The same study indicated that this has increased in recent months and was 16% of all second-hand sales in July.  This may indicate that some buyers are optimistic about the market outlook and are preparing to make a new purchase by restoring their “first-time purchaser” status.

How does it work?

A person (HKPR) holding a property as a joint proprietor or individual owner may transfer (sell) their ownership of the property to a close relative such as a parent, sibling, spouse or child. This “close relative” status exempts the relative from paying the 15% Ad Valorem Stamp Duty (AVD).  The transaction is subject to Stamp Duty based on the determined value of the property, but the person (transferor) becomes eligible for first-time buyer status, exempting them from the 15% (AVD) on a future purchase.

How It Saves Taxes – An Illustration (Only Available for HKPR)

For example, a couple jointly owns a property with a market value of HK$6 million. The husband transfers the title of the property to his spouse. The total amount of tax rate payable is HK$45,000 ($3,000,000 x 1.5%). Later, the husband purchases a residential unit with a market value of HKD$8 million as a first-time buyer, avoiding the 15% AVD (HK$1.2 million), instead paying only the 3.75% stamp duty (HK$300,000).  This results in a net tax savings of HK$855,000 compared to what would have been paid had he purchased the property without having transferred ownership of the original property.

Under current laws, the husband may do this repeatedly - buy a property and then transfer it to his wife – and be entitled to the first-time buyer status and exempt from the AVD on each new purchase. Compared with the 15% AVD, the stamp duty applicable to first-time home buyers is much lower, ranging from 1.5% to 4.25%. If the property price is under HK$2 million, only a printing fee of HK$100 is required. 

In the first-hand property market, a similar strategy has evolved, with some with prospective buyers “borrowing” their relatives names and registering multiple lottery applications in order to increase their chances of purchasing units. If successful, they can transfer the property ownership from their relative to themselves, typically after waiting three years to avoid being subject to the Special Stamp Duty (SSD), an additional tax payable if you sell or transfer within 3 years of purchase.

These tax-saving strategies are not illegal and sound like no-brainers for anyone seeking to build a portfolio of properties.  So why doesn’t everyone (who can afford to buy multiple properties) do this?  This approach is obviously beneficial, but one must also pay attention to the risks involved.

Risks of Transfers

Although transferring property titles helps some buyers to reduce taxes, there are other considerations.

Mortgage Financing :  Banks are naturally careful about awarding a mortgage considering the financial strength of all parties involved, particularly for older purchasers or those with multiple properties in their portfolio.  In the above example, the husband may qualify for a mortgage when acquiring a property but may later find that the bank will not transfer the mortgage to his wife if she doesn’t meet various stress tests (ie. debt-to-income, etc.).  Or the bank may allow the mortgage transfer but at a higher interest rate.  In such cases, the husband could provide a personal guarantee on his wife’s mortgage, though again the bank will review the combined financial strength of the two parties.  The same applies to a parent transferring ownership to a child.  Just as importantly, a family should not undertake more debt (i.e. risk) than they can comfortably support.

Costs : One must consider the costs of the transaction, both the immediate costs (such as attorney’s fees) and costs that may be incurred later.  If the mortgage is transferred before the expiry of a penalty period, it may be necessary to return the cash rebate and pay the penalty interest to the bank.

Estate Planning : With joint-ownership, if one party passes away, the ownership automatically transfers to the other.  Moving to separate ownership results in a more protracted probate process of the sole owner dies, especially if they do not have an updated will, which then leads to an even more exhaustive intestate court process and potentially legal disputes amongst the family.

Other Tax and Title Considerations : Some owners may attempt to transfer their property at a below-market price (to reduce stamp duty).  However, tax authorities have the right to recover the difference, potentially with a penalty.  If the title transfer is done as a Deed of Gift (with no money changing hands between the parties), it is still considered a property transfer and subject to the same tax treatment as a sale.  Properties transferred via a Deed of Gift are also subject to claims by creditors if the donor declares bankruptcy within 5 years.  This title encumbrance can cause complications later, making the property difficult to sell, since banks may be unwilling to provide a mortgage to a new buyer during that 5-year period. 

In summary, property transfers are legal ways to reduce your property taxes. However, there are potential complexities to consider and you should engage professional legal and tax advisors to assist you in making an informed decision before employing this strategy.  In addition, the Government has indicated that it is closely monitoring such transfers, so stay abreast of the latest policies in case they change.

Note: Illustrations in this article are for reference only and no representation or warranty is made regarding their accuracy.  This article in no way represents legal, tax, accounting or investment advice. Readers considering real estate transactions should consult professionals in these areas for advice.

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Sale and purchase, hong kong, sar.

• Forms of real estate ownership
• Ownership restrictions
• Mandatory pre-emption rights

How is a lawful and proper transfer of title to real estate to a purchaser effected?

An interest in land/real estate can either be held under freehold or leasehold ownership. If you acquire a freehold property, you acquire the exclusive right to both the building and the land where the building is erected on. A freehold owner can use and make alterations to the building as it wishes so long as it acts lawfully. On the other hand, if the property is held under leasehold ownership, the acquirer, namely the lessee, only acquires a right to use the property excluding the land beneath it for a limited period of time known as the term. Anything done to the property is governed by the terms of the lease.

In Hong Kong, since 1997, all land has become the property of the People's Republic of China while the government of the Hong Kong Special Administrative Region is responsible for its management, use and development. In other words, every piece of land in Hong Kong (with the sole exception of St. John's Cathedral, the only freehold property in Hong Kong) is leasehold property .

When the government decides to release land for building it usually does this by selling the land (or ‘parcel’ or ‘lot’) at an auction. Legally speaking, the government does not sell the land; it sells the right to occupy it for a term of years. This system gives the Hong Kong Government as the grantor a high degree of control over the way in which land is developed and used through covenants and conditions imposed on the grantee and contained in the lease. Since 1997, the term granted to the lessee has been 50 years from the date of the grant.

In the past, the government as lessor would issue a Government Lease to the purchaser (usually a developer) (as the lessee). Nowadays, instead, the government executes Conditions of Sale/Exchange/Grant/Re-grant/Extension depending on the purpose of grant. These are contracts giving a conditional right to the purchaser which will be converted to a form of legal ownership upon compliance with all the conditions stipulated. After a successful acquisition of the land, the purchaser (who is usually a developer) will recoup his investment in the construction and make a profit before the term runs out. Once a unit is sold or if the entire building as a whole is sold to a property company, the developer ceases to be involved. The purchasers take its place and they will also be able to sell their leasehold interests later or to assign the right to use to new tenants.

In Hong Kong where supply of land is limited, real estate is usually developed in form of a multistorey building. Under this system, the entire land and building is notionally divided into a number of undivided shares which are allocated to different flats. The sale of flat to a purchaser is effected by transferring the relevant undivided shares attached to the flat. Legally speaking, as the division of land into shares is only notional, all the flat owners own the land in common. For practical reasons, exclusive possession of a flat is at the same time guaranteed by execution of a document called a ‘deed of mutual covenant’ involving the developer, the first purchaser and sometimes the management company. Therefore, each flat owner, by assignment, owns a number of undivided shares in the land together with the exclusive right to occupy his/her flat.

Apart from a leasehold interest, a purchaser also enjoys an easement, meaning the non-exclusive right to use another’s land in a particular way for the benefit of the use of one’s own land. This is a proprietary interest which can be granted expressly, impliedly or by statute. Examples are a right of way and a right to park cars on neighbouring land.

In the case of a multi-storey building, the tenants also enjoy the right to use the common parts of the building, which refer to those parts which are not delineated as being for the exclusive use of one tenant in the deed of mutual covenants. Common examples are the corridors and staircase. This right can be expressly specified in the first assignment, Deed of Mutual Covenant and Sub-Deed of Mutual Covenant (if any) or implied by the Building Management Ordinance.

Last modified 19 Jul 2023

No. However, foreign investors are equally subject to stamp duty, Special Stamp Duty and in particular Buyer's Stamp Duty. Please refer to the ‘Taxes in Hong Kong’ section for more details.

In addition, the new guideline ‘Prudential Measures for Mortgage Loans on Non-residential Properties’ issued by the Hong Kong Monetary Authority on 19 August 2020 sets out the applicable loan-to-value ratio limits for non-residential property mortgage loans for non-local mortgage applicants (whose primary income is sourced mainly outside Hong Kong). Non-local mortgage applicants (without an outstanding mortgage) are subject to a limitation on the loan-to-value ratio of 40% for residential properties and 40% for commercial and industrial properties. For non-local mortgage applicants (with an outstanding mortgage), the limitation on the loan-to-value ratio is 30% for residential properties and 30% for commercial and industrial properties. Non-local purchasers (without an outstanding mortgage) securing mortgage loans based on net worth rather than income streams are subject to limitations on loan-to-value ratios of 40% regardless of property value for residential properties and 40% for commercial and industrial properties. Non-local purchasers (with an outstanding mortgage) securing mortgage loans based on net worth rather than income streams, they are subject to loan-to-value ratios of 30% for residential properties and 30% for commercial and industrial properties.

• Real estate legislation
• Specific legislation

Contracts are primarily governed by the general common law inherited from the English system. There are also additional statutory provisions relating to real estate transactions, including the Conveyancing and Property Ordinance, (Cap. 219 of the Laws of Hong Kong) Land Registration Ordinance (Cap. 128 of the Laws of Hong Kong) and related regulations.

Effective transfer of ownership

• Registration of title
• Steps in the transaction
• Due diligence

As between the Government and the purchaser (usually a developer), a contract called "Conditions of Sale" or "Conditions of Exchange" (as the case may be) is executed. This has the effect of giving the purchaser a mere conditional right. Upon actual compliance with all the positive conditions in the contract, this right will be converted into a form of legal ownership and the purchaser becomes the holder of the legal title.

In a common sale and purchase transaction, a transfer is executed by a formal document called a "deed" which passes the legal rights over and interests in the land from the vendor to the purchaser. The sale and purchase agreement and the assignment together with a record in the prescribed form called a "memorial" is registered at the Land Registry.

Under the Land Registration Ordinance, registrable documents include those instruments which:

• are in writing; and
• affect land in Hong Kong.

Once registered, the transfer of title is recorded with details of ownership of the land and certain title documents which are made available to the public.

A purchaser must register all instruments effecting a transfer within one month after the time of execution in order to preserve priority so that the transfer takes effect as at the date of execution. Such registration will ensure that the purchaser has priority over any subsequent encumbrances registered against the land by any third party such as charging orders and mortgages . This is a reliable government run system, however, registration affects only priority and does not produce or effect title.

Title insurance

The Land Titles Ordinance (Cap. 585 of the Laws of Hong Kong), which is still being discussed in the legislature, will introduce a system of title registration and title insurance in Hong Kong. However, it is not clear when this will become effective.

A typical sale and purchase transaction relating to a residential property involves:

Preliminary negotiations

The purchaser goes to view the flat. Usually no legal advisors are involved at this stage.

Written agreement for sale and purchase

Once it is agreed between the vendor and purchaser that the transaction should proceed (price, etc has been agreed), they will enter into the following written agreement(s).

The provisional agreement

This is usually short and simple and is normally prepared by the estate agent and executed by the vendor, purchaser and estate agent. The usual terms include:

• The parties
• The property
• Amount of deposit and payment details
• Date of execution of the formal agreement
• The property will be vacant or subject to tenancy upon completion
• The completion date
• Which of the parties is responsible for paying the stamp duty and other legal expenses on the transaction
• The amount of commission payable to the estate agent
• Liability for breach of the agreement, and
• Any special terms

The formal agreement

The formal agreement contains more detailed terms of the transaction based on the provisional agreement. It is usually prepared by the vendor’s solicitor and approved by the purchaser’s solicitor. The parties would sign this agreement after taking legal advice on the terms and the transaction.

Instructing solicitors

The vendor and the purchaser are required to be separately represented by lawyers unless in certain circumstances, such as where the parties are related by blood or the consideration for the land does not exceed HK$1,000,000 or uncompleted development. The solicitors acting for the purchaser can also act for the mortgagee (if any) so long as there are no conflicts of interests or a significant risk that a significant conflict will arise.

Signing the formal agreement for sale and purchase

The vendor's solicitor prepares and sends the draft formal agreement to the purchaser's solicitor for approval. There may be subsequent negotiations about the draft terms. Once the terms are agreed, the vendor's solicitor prepares a clean copy for engrossment and sends it (in duplicate) to the purchaser's solicitor.

The purchaser's solicitor sends the agreement (signed by the purchaser) and the duplicate, together with the deposit, to the vendor's solicitor.

The vendor's solicitor then arranges for the vendor to sign the agreement and the duplicate and date them. The vendor's solicitor keeps the signed duplicate and sends the signed original to the purchaser's solicitor.

The purchaser's solicitor will first submit the signed formal agreement to the Stamp Duty office for stamping and subsequently lodge the stamped formal agreement in the Land Registry for registration.

Preparing the assignment

The document of transfer (known as an assignment), must be prepared for the vendor to transfer its interest in the property to the purchaser upon completion.

The purchaser's solicitor prepares the assignment and sends the draft to the vendor's solicitor for approval.

On completion, the purchaser hands over:

• The balance of the purchase price to his solicitor in exchange for the assignment executed in its favour by the vendor
• All other title deeds including the release from the vendor's mortgage (if any), and
• The keys if the property is sold free of occupation by any other person.

The assignment must be stamped as having had the appropriate stamp duty paid and registered in the Land Registry by the purchaser's solicitor. A mortgage by a limited company must also be lodged with the Companies Registry for filing and registration. After stamping and registration, the title deeds are sent to the purchaser's mortgagee (if any) for retention as security. If there is no mortgage, the original title deeds are retained by the purchaser.

Yes. Purchasers should rely on their own investigation of title, searches, site inspection and survey. The purchaser's lawyer will review the title information provided by the vendor's lawyer (including all title deeds and related documents) and will carry out a set of searches, including a search in the Land Registry to check for any adverse entries such as charges over the land and other encumbrances. If there are any problems on title, the purchaser's solicitors will raise formal queries which the vendor's solicitors are obliged to answer satisfactorily in order to prove good title. Otherwise, the purchaser can refuse to proceed with the purchase.

Consent is required from anyone who has lent money to the vendor and has a security interest in the property being sold unless the mortgage is to be paid off at completion (which is, in fact, the most common situation).

In the case of residential property, the purchaser generally also needs consent from any other occupiers with a proprietary interest and confirmation that they will move out. If the property is sold subject to a tenancy, the parties may wish to enter into a 'novation' agreement to transfer the existing tenancy agreement to the new owner.

In the case of property development, consent from the government is required if the developer wishes to sell the flats whilst they are in course of construction in order to finance the project.

• Form of contract
• Seller's warranties
• Misrepresentation

Yes. The contract must be in writing and signed by each party. It must contain all the terms of the sale, including details of the land to be sold and the price, as well as the date when the transfer will take place and the documents to be entered into on that date. The contract must be signed by both the purchaser and the vendor. The contract is then exchanged, with the lawyers sending the documents signed by their clients to each other.

What is a typical contract or SPA in this jurisdiction like?

A typical contract sets out the date when the transfer will take place and the documents to be entered into on that date. It must contain all the important terms of the sale, including the:

• Details of the parties
• Payment of initial deposit (normally 3-5% of the purchase price)
• Payment of a main or further deposit (usually up to 10% including the initial deposit)
• Payment of the balance of the purchase price (90% if a 10% deposit has been paid)
• Completion date
• Date for signing the formal sale and purchase agreement
• Relevant legal costs and stamp duty
• Liability of the purchaser in the event it fails to perform the agreement, and
• Payment of estate agent's commission.

The contract must be signed by both the purchaser and the vendor. The contract is then exchanged, with the lawyers sending the documents signed by their clients to each other. The contract may also contain provisions regarding how the property will be managed between exchange and completion, and how any income will be allocated between the purchaser and the vendor, particularly where completion will be some time in the future or if the sale concerns an investment property (such as a sale subject to tenancy).

Contracts invariably contain provisions relating to insurance and what would happen if the property is damaged before completion.

In real estate transactions, payment of 3% to 5% of the purchase price as an initial deposit upon signing of a provisional agreement and 10% of the purchase price as a further deposit inclusive of the payment of the initial deposit upon signing of the agreement for sale and purchase is usual.

No warranties are given by law and warranties related to the state and condition of the building are very rare.

Since warranties are not compulsory they can be varied to suit the parties involved in the transaction.

If the transaction has been induced by fraud, or misrepresentation amounting to fraud, or by mutual mistake of a fundamental character, the contract will become void upon the innocent party taking action in court, or defending his failure to act. The court will order a retransfer back to the vendor of the land sold, and repayment to the purchaser of the purchase money with interest from the date of payment. The purchaser may also be entitled to the costs, charges and expenses incidental to the purchase and transfer, including the costs of due diligence, and the costs of the action to set aside the transfer.

Where the misrepresentation is innocent, the execution of the transfer is not a bar to it being reversed, but the court may in its discretion award damages instead of reversing the transfer.

• Real estate and public law
• Environmental liability
• Planning/zoning issues
• Agreements with public bodies
• Expropriation/compulsory purchase

Town planning (zoning), construction and environmental laws may apply and should be investigated with the assistance of lawyers. As part of its due diligence, a purchaser should confirm that the property is being used in compliance with the use authorized by the occupation permit issued by the Buildings Department and that the property is not subject to any notices of violation issued by any authority.

The person causing the pollution is primarily responsible for its clean-up. But if that person cannot be found or pursued, then environmental legislation allows local authorities to approach the current owners and/or occupiers of the land.

Buyers should therefore take careful note of any environmental issues identified in the survey and should seek to apportion liability for these or adjust the price of the property accordingly.

The purchaser can check the government lease related to the parcel of real estate to check the permitted user of the land. An occupation permit is required for any construction on land and it includes information on the authorized use of the building. If a purchaser is planning to change the use of the real estate beyond the permitted uses, it will need to seek approval from the Building Authority. The purchaser should also check the Outline Zoning Plan (or Development Permission Area Plan for land in the New Territories – those parts of Hong Kong other than Hong Kong Island and Kowloon) for any restriction on intended users and to apply for planning permission if needed. It has been held that when there are contradictions between government leases and Outline Zoning Plans, compliance with either one is not sufficient since the government and the Town Planning Board are independent entities. Therefore, a cautious purchaser should seek for permission if there are any contradictions.

In the case of a substantial proposed development local authorities will usually require the developer to enter into a development agreement. In exchange for planning permission, the developer must comply with certain obligations, including, for example, making a payment or carrying out public works.

As well as imposing a payment under the development agreement, the local authority will usually require the developer to pay all of its fees. Other statutory bodies, for example, water authorities, may also require development agreements.

Local authorities and certain other bodies have powers of compulsory purchase where the acquisition of land is necessary for a proposed development. Compensation is available based on the value and possibly the development potential of the land acquired. If the owner carries on a business on the land acquired, compensation for loss of that business may also be awarded.

Procedures for compulsory purchase can be protracted, but most cases are concluded by negotiation between the acquiring authority and the real estate owner.

Owners of more than 90% of the undivided shares in a lot may in some circumstances make an application to the Lands Tribunal for an order to sell all the undivided shares in the lot for the purposes of redevelopment (or, alternatively, the Chief Executive may specify a lower percentage, in any event not lower than 80%). Such an order will be made if redevelopment is justified due to the age or state of repair of the building and the majority of the owners have taken reasonable steps but failed to acquire all of the undivided shares through negotiation on fair and reasonable terms.

If the decision to compulsorily re-acquire is made by the government, effectively there is no possibility of resisting it. It has been held that affected owners do not even have a right to make representations by way of objection to the decision. However, since the decision is a public decision, the affected owners can challenge it by way of judicial review on limited grounds: illegality, procedural impropriety and irrationality. Again, the prospect of success is low.

The government may commence statutory eviction proceedings by serving a clearance notice. There is no obligation on the part of the government to rehouse the affected owners as long as compensation has been awarded in accordance with statutes.

• Taxation of asset deals
• Taxation of share deals

Stamp Duty, Buyer's Stamp Duty and Special Stamp Duty

Please refer Tax of acquisitions  for further information.

With effect from 1 August 2021, the sale or purchase of any Hong Kong stock is charged at a rate which varies with the amount or value of the consideration as follows (although an exemption may apply to a transfer of Hong Kong stock between companies with at least a 90% common shareholding if certain conditions are satisfied):

If the property is to be let and rent is collected then property tax is payable. The exact amount payable is calculated at a percentage of the 'Net Assessable Value'. This percentage has been set at 15% from 2008/09 onwards. The Net Assessable Value is calculated by taking the annual rental income less irrecoverable rent, rates and a statutory allowance for repairs and outgoings.

Corporations can elect not to pay property tax but profits tax instead (at 16.5%) on net profits derived from rental income.

Susheela Rivers

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Stamp Duty Rates

On sale or transfer of immovable property in hong kong.

Any instrument executed on or after 26 November 2020 for the sale and purchase or transfer of non-residential property will be subject to AVD at the rates under Scale 2.

With effect from 5 November 2016, Scale 1 AVD rates are divided into Part 1 and Part 2. Part 1 of Scale 1 applies to instruments of residential property and Part 2 of Scale 1 applies to instruments of non-residential property and certain instruments of residential property executed on or after 23 February 2013 but before 5 November 2016. Part 2 of Scale 1 is in essence the prevailing AVD at Scale 1 rates before 5 November 2016. The rates at Scale 1 are as follows:

Part 1 of Scale 1 (Applicable to instruments of residential property executed on or after 5 November 2016 ): A flat rate of 15% of the consideration or value of the property (whichever is the higher)

Part 2 of Scale 1 (Applicable to instruments of residential property executed on or after 23 February 2013 but before 5 November 2016 and instruments of non-residential property executed on or after 23 February 2013 but before 26 November 2020):

(Where the stamp duty calculated includes a fraction of $1, round-up the duty to the nearest $1.)

You can refer to the Q&A and examples of calculating AVD on the following links.

You can refer to the current stamp duty rates table for immovable property, lease and stock in Hong Kong on the following link.

Stamp duty rates table

With effect from 11 am on 22 February 2023, stamp duty on sale of immovable property in Hong Kong is charged at rates which vary with the amount or value of the consideration as follows:

With effect from 1 April 1999, the exact amount or value of the consideration will be used to compute the stamp duty for property transfers. That is, round-up of the value or consideration to the nearest $100 is no more required. 

With effect from 31 January 1992, stamp duty at the same rates as conveyances of immovable property is chargeable on agreements for the sale and purchase of residential property. After the agreement has been so stamped, the related conveyance will be chargeable with a fixed stamp duty of $100 only.

Find out the duty rates from 1 April 1988 to 10:59:59 am on 22 February 2023 on the following link.

With effect from 20 November 2010, any residential property acquired on or after 20 November 2010, either by an individual or a company (regardless of where it is incorporated), and resold within 24 months (the property was acquired on or after 20 November 2010 and before 27 October 2012) or 36 months (the property was acquired on or after 27 October 2012), will be subject to a Special Stamp Duty (SSD).

SSD is calculated by reference to the stated consideration or the market value of the property (whichever is the higher), at the following rates for different holding periods of the property by the seller or transferor before disposal -

With effect from 27 October 2012, unless specifically exempted, Buyer's Stamp Duty (BSD) is payable on an agreement for sale or a conveyance on sale executed for the acquisition of any residential property.  BSD is charged at 15% on the stated consideration or the market value of the property (whichever is the higher).

You can refer to the Q&A and examples of calculating SSD and BSD on the following links.

On Lease of Immovable Property in Hong Kong

Stamp duty is calculated at rates which vary with the term of the lease as follows:

Note 1: The yearly rent/average yearly rent/total rent has to be rounded-up to the nearest $100.

Please note that any deposit which may be mentioned in the lease will not be taken into account in assessing the stamp duty.

On Transfer of Hong Kong Stock

With effect from 1 August 2021, stamp duty on sale or purchase of any Hong Kong stock is charged at rate which vary with the amount or value of the consideration as follows:

Find out the duty rates from 1 April 1993 to 31 July 2021 on the following link.

Buyer's Stamp Duty (BSD)

Under what circumstances will BSD be payable?

Unless specifically exempted, BSD is payable on an agreement for sale or a conveyance on sale for the acquisition of any residential property executed on or after 27 October 2012, except where the purchaser or the transferee is a Hong Kong permanent resident (HKPR) acquiring the property on his/her own behalf (i.e. the person is both the legal and beneficial owner).

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Who will be liable to pay the BSD?

The buyer or the transferee is liable to pay the BSD.

Will BSD be applicable to a non-HKPR who has entered into a Provisional Agreement for Sale and Purchase (PASP) in respect of a residential property before 27 October 2012 and signed an Agreement for Sale and Purchase (ASP) on or after that date?

For BSD purposes, a PASP is a chargeable agreement for sale. The non-HKPR who entered into a PASP for purchase of a residential property before 27 October 2012 is regarded as having “acquired” the property before that date. Hence, BSD will NOT apply to the acquisition of the property.

How to calculate BSD? What is the rate of BSD?

BSD is charged at a flat rate on the stated consideration or the market value of the property (whichever is the higher). For a non-HKPR who entered into a PASP for purchase of a residential property on or after 27 October 2012 but before 25 October 2023, the rate is 15%. If the PASP is entered into on or after 25 October 2023, the applicable rate will be 7.5%.

How to determine whether a person is a HKPR under the Stamp Duty Ordinance (Cap.117) (SDO) or not?

Under the SDO, HKPR means a person who holds a valid permanent identity card (“PIC”). HKPRs also include the aged, the blind or the infirm who are not required to register or apply for an identity card under regulation 25(e) of the Registration of Persons Regulations (Cap. 177A) and are entitled to be issued with a PIC if they make an application for a PIC. A person who only holds a Notice of Application Result for Verification of Eligibility for PIC issued by the Immigration Department cannot be regarded as a HKPR for the purposes of BSD.

Is a company whose shareholders and directors are all HKPRs liable to BSD?

A limited company, regardless of the residency status of its shareholders and directors, will be liable to BSD if it acquires a residential property on or after 27 October 2012.

Is an agreement for sale signed by a non-HKPR to acquire a residential property and hold it as a trustee for a HKPR subject to BSD?

An agreement for sale signed by any person (irrespective of whether the person is a HKPR or non-HKPR) in the capacity of a trustee on behalf of a HKPR is chargeable with BSD, unless the latter is a mentally incapacitated person.  Mentally incapacitated person means a person who is mentally disordered or mentally handicapped within the meaning of the Mental Health Ordinance (Cap. 136) and is, because of his or her mental state, incapable of managing and administering his or her property and affairs.

Is the instrument for transfer of a serviced apartment chargeable with BSD?

For stamp duty purposes, the classification of premises in terms of “residential property” or “non-residential property” is by reference to the permitted use rather than the actual use of the properties, or the label or description given to the properties.  Unless there is documentary evidence (such as Government lease, occupation permit, etc) to show that the property cannot be used for residential purposes, the instrument signed by a non-HKPR as buyer for acquisition of the property will be chargeable with BSD.

Under what circumstances will BSD be exempted?

BSD will be exempted under the following circumstances –

If a residential property is acquired jointly by a HKPR and his/her spouse who is not a HKPR, will any BSD be payable?

Acquisition of residential properties by a HKPR jointly with a close relative (i.e. spouse, parent, child, brother and sister) who is not a HKPR and each of them is acting on his/her own behalf is not chargeable with BSD.

For stamp duty purposes, will a parent-in-law be regarded as a close relative?

For stamp duty purposes, a parent-in-law is not regarded as a close relative.

If a residential property is acquired by a HKPR and a non-HKPR who is not the HKPR's close relative, will only half of the price or the value of the property be chargeable with BSD?

If a residential property is jointly acquired by a HKPR and a non-HKPR, who are not close relatives, whether as joint tenants or tenants-in-common, the BSD will be payable on the stated consideration or value of the property, whichever is the higher, regardless of the share of interest of the non-HKPR in the acquisition of the property.

Mr. A, a HKPR, signed a PASP to purchase a residential property on 15 October 2012. Ms. B (Ms. B is not a HKPR and not a close relative of Mr. A) was added as one of the purchasers to the ASP which was signed on or after 27 October 2012. Will Mr. A and Ms. B be liable to BSD?

In the above situation, Ms. B has acquired part of the property from Mr. A on or after 27 October 2012.  As Ms. B is not a close relative of Mr. A, there will be no exemption of BSD.  BSD is payable on the stated consideration or value of the property, whichever is the higher, regardless of the share of interest of Ms. B in the acquisition of the property.

Mr. A, a HKPR, signed an ASP to purchase a residential property on 15 October 2012. Ms. B (Ms. B is not a HKPR and not a close relative of Mr. A) was added as one of the transferees to the assignment which was executed on or after 27 October 2012. Will Mr. A and Ms. B be liable to BSD?

In the above situation, Ms. B has acquired part of the property from Mr. A on or after 27 October 2012. As Ms. B is not a close relative of Mr. A, there will be no exemption of BSD. BSD is payable on the stated consideration or value of the property, whichever is the higher, regardless of the share of interest of Ms. B in the acquisition of the property.

Mr. A signed a PASP to purchase a residential property on 15 October 2012.  Subsequently on or after 27 October 2012, he nominated Mr. B (Mr. B is not a HKPR and not a close relative of Mr. A) to take up the ASP. Will Mr. B be liable to BSD?

In the above situation, Mr. B has acquired the property from Mr. A on or after 27 October 2012. As Mr. B is not a close relative of Mr. A, there will be no exemption of BSD. BSD is payable on the stated consideration or value of the property, whichever is the higher.

If a non-HKPR inherits a residential property from a deceased person's estate on or after 27 October 2012, will he/she be liable to BSD?

The non-HKPR is not liable to BSD as the residential property which is inherited from a deceased person's estate under a will or the law of intestacy or right of survivorship by a beneficiary is exempted from stamp duty. "Stamp duty" is defined under the Stamp Duty Ordinance (Cap.117) to include ad valorem stamp duty, special stamp duty and BSD.

Are Government Grants/Leases chargeable with BSD?

All grants by the Government (including those by way of Government land sales) and all Government leases are not chargeable with stamp duty (including BSD).

Will any relief be given to a person who is not a HKPR but acquiring residential property for redevelopment?

Relief is given by way of refund of the BSD paid. A person can apply to the Collector of Stamp Revenue for a refund of the BSD paid after the person, or if the person is a body corporate, jointly with its associated body corporate, has become the owner of the entire lot to be redeveloped and -

Where residential properties in a lot were firstly acquired by several companies and then transferred to a company for redevelopment, will the BSD paid be refunded?

If the transferor companies are unrelated to the transferee, the BSD paid by the former cannot be refunded. Separately, on acquisition of the residential properties from the transferors, the transferee has to pay the BSD.  The transferee may claim for a refund of the BSD it paid if the conditions mentioned in A18 above were met.

If the transferor companies are associated bodies corporate of the transferee as defined under section 45 of the Stamp Duty Ordinance (Cap.117), the transferee may claim for a refund of the BSD paid by the transferor companies if the conditions mentioned in A18 above were met.

Where residential properties in a lot are acquired by several companies for joint development, will the BSD paid be refunded?

The companies, being the joint owners of the lot, may respectively claim for a refund of the BSD they separately paid at the times they acquired the various residential properties if they have obtained the consent to commence any foundation works for the lot; or have demolished or caused to demolish all buildings (if any) existing on the lot if not prohibited by law and obtained the approved building plan for the redevelopment after they became the joint owners of the whole lot.

Will BSD be payable on an instrument of exchange under which a residential property is exchanged for another residential property?

If under the instrument, a non-HKPR uses his/her residential property to exchange for another residential property and has to pay a sum of money (i.e. equality money) which represents the difference in value of the two properties, BSD which is computed by reference to the equality money will be charged on the instrument and the non-HKPR is regarded as the buyer.

Will BSD be payable on an instrument of exchange under which a non-residential property is exchanged for a residential property?

If a non-HKPR uses his/her non-residential property to exchange for a residential property, BSD which is computed by reference to the value of the residential property will be payable on the instrument and the non-HKPR is regarded as the buyer.

When should BSD be paid?

BSD has to be paid within 30 days after the execution of the chargeable document. If the time for stamping of any instrument chargeable with BSD begins before the Stamp Duty (Amendment) Ordinance 2014 was published in the Gazette (i.e. 28 February 2014), that time for payment is to be replaced by a period of 30 days commencing immediately after the date of gazettal (i.e. on or before 30 March 2014).  As 30 March 2014 is a Sunday, the due date for payment will be extended to 31 March 2014.

Will the BSD paid be refunded if the buyer and seller cancel the agreement for sale after BSD was paid?

In case the agreement for sale is cancelled (other than for further resale such as confirmor sale or nomination of another buyer), the buyer can apply for refund of the BSD within 2 years after the agreement is cancelled.

What documents are required for claiming exemption of BSD by a HKPR buyer/transferee? (For cases where the instrument has been stamped before the gazettal of the Stamp Duty (Amendment) Ordinance 2014 (“the Amendment Ordinance”), please see Questions 26 and 27 below.)

For e-stamping cases, the original statutory declaration ( IRSD131 ) of the buyer(s)/transferee(s) and a copy of his/her Hong Kong Permanent Identity Card have to be submitted within 30 days after the stamping application is submitted.

In respect of paper application, the applicant has to submit the following:

If a HKPR buyer/transferee acquired a residential property on or after 27 October 2012 and has stamped an instrument by e-stamping before the gazettal of the Amendment Ordinance, what documents are required for claiming exemption of BSD?

The following documents are required:

If a HKPR buyer/transferee acquired a residential property on or after 27 October 2012 and has stamped an instrument by conventional stamping before the gazettal of the Amendment Ordinance, what documents are required for claiming exemption of BSD?

What documents are required for claiming exemption of BSD for the reason of transfer of residential property between close relatives?

The stamping must be by paper application, the applicant has to submit the following:

If the instrument was stamped before the gazettal of the Amendment Ordinance, the applicant is required to submit a duly completed Supplemental Information Form (Appendix B of Stamping Circular No. 03/2014 ) instead of the form IRSD 112.

What documents are required for claiming exemption of BSD for the reason of acquiring residential property by a HKPR jointly with his/her close relative who is a non-HKPR?

If the instrument was stamped before the gazettal of the Amendment Ordinance, the applicant is required to submit a duly completed Supplemental Information Form (Appendix B of Stamping Circular No. 03/2014 ) instead of the form IRSD112.

Why is a HKPR buyer/transferee required to make statutory declaration in order to claim for exemption of BSD?

Under the Amendment Ordinance, exemption of BSD can be granted when evidence is shown to the satisfaction of the Collector of Stamp Revenue that the buyer/transferee is a HKPR acting on his/her own behalf in acquiring the residential property.

Whether a person is a HKPR acting on his/her own behalf in the relevant acquisition is a matter within his/her personal knowledge.  In order to examine any claim for the BSD exemption for this reason, IRD requires each applicant to declare, by virtue of the Oaths and Declarations Ordinance (Cap. 11), that he / she is a HKPR and was “acting on his/her own behalf” in the acquisition of the residential property.

Why is a copy of the Hong Kong Permanent Resident Identity Card not sufficient to claim for exemption of BSD?

In order to get the BSD exemption, apart from being a HKPR, the applicant has to act on his/her own behalf in acquiring the residential property.  Therefore, mere submission of a copy of the Hong Kong Permanent Resident Identity Card is not sufficient.

Who can take the applicants’ statutory declaration?

The applicants can make their statutory declaration before a Notary Public, Justice of the Peace, solicitor or the Commissioner for Oaths at the IRD.

What are the service hours and address of the oath and affirmation services provided by the IRD?

In respect of the oath and affirmation services provided by the IRD, the service hours are from 9:00 am - 12:00 noon on Monday to Friday.  If you would like to make a statutory declaration in the IRD, please call 2594 3250 or 2594 3067 to make an appointment in advance and bring along the completed Statutory Declaration (as specified in the form IRSD131 ) to visit 3/F on the Inland Revenue Centre at the scheduled time.  

Can a statutory declaration be made outside Hong Kong?

Statutory declaration made by any person outside Hong Kong before a notary public, justice of the peace, or other person having authority to take or receive a declaration, confirming that he/she is a HKPR acting on his/her own behalf in acquiring the residential property in Hong Kong, is accepted for applying for exemption of BSD.  The relevant statutory declaration form can be downloaded here ( IRSD131A ).  As overseas jurisdictions might prescribe a different form for making statutory declaration, if the substance of the statutory declaration made using such a form is the same as that prescribed in form IRSD131A, the overseas statutory declaration form will be accepted by the Stamp Office.

Will the IRD accept a statutory declaration made by using the sample form IRSD-xx1 that the IRD sent to the Law Society in February 2013?

If the substance of the statutory declaration is not changed and the statutory declaration does not contain words such as "Draft", "Sample", "Specimen", or other words of similar meanings, the statutory declaration will be accepted.

When should the applicant submit the statutory declaration if the instrument has already been stamped before the gazettal of the Amendment Ordinance?

The statutory declaration should be submitted on or before 30 April 2014.  However, if due to special circumstances, the statutory declaration cannot be submitted by 30 April 2014, the applicant may apply to the IRD for an extension of time to submit the statutory declaration.  The IRD will consider the application on a case by case basis.

If there is more than one buyer/transferee in the acquisition of a residential property, shall each and every buyer/transferee submit a statutory declaration in support of the exemption of BSD claim?

For exemption of BSD claim by reasons of acquiring residential property by a number of HKPRs together, or by a HKPR jointly with his/her non-HKPR close relative, or transfer of residential property between close relatives, every buyer/transferee has to submit a statutory declaration declaring that he / she is a HKPR, if applicable, and is acting on his / her own behalf in acquiring the residential property.