Land in Hong Kong is unique in that it all belongs to the government. Anyone buying property buys an agreement of lease, ranging from 50 years to 999 years. Almost any individual is entitled to buy, but companies wishing to do so must be registered with the Hong Kong Companies Registry.

Buying a Property

Finding a property

The most convenient way to locate a property is through a local property agent, who will manage the entire buying process including price negotiations. The property agent will take a commission on the sale, which is often negotiable but is usually one percent of the sale price, collected from both the vendor and the purchaser.

Many local newspapers, websites and magazines also have classified sections with extensive property listings. Some will be associated with agencies, others will be direct transactions.

Financing the property

It is fairly straightforward to get a mortgage for the purchase of a property, although it is much more difficult to get a mortgage on properties that are older than 10 years. It is possible to mortgage up to 70 percent of the property's value for second-hand properties, and all banks offer a variety of options depending on the buyer's needs.

• See The AngloFILE Mortgages and Home Finance in Hong Kong

The following documents are needed to apply for a mortgage:

• a copy of the buyer's Hong Kong Identity Card
• a copy of the provisional Sale and Purchase Agreement (if available)
• proof of income

Negotiating the purchase

It is advisable to have a solicitor look over all documents pertaining to the transaction, beginning with checking ownership. According to the Land Registration Ordinance, all leases must be listed at Hong Kong's Land Registry office, where searches can be conducted for a nominal fee. Buyers should have their lawyer conduct a detailed title deed search to make sure everything is in order with the property in question.

A list of Hong Kong solicitors can be found at the Law Society of Hong Kong website. Among other things, the solicitor should check whether the property has an existing mortgage. If so, the sale terms must specify that the mortgage will be cleared before the transaction of property is made.

After the asking price has been agreed on, it is typical to sign a binding provisional agreement which includes a non-refundable deposit. Once this has been completed, the solicitor can begin the search while the final Sale and Purchase Agreement is drawn up for approval. On the signing of this Agreement, the purchase deed will be drawn up by the buyer's solicitor and approved by the vendor's solicitor before any money changes hands.

Before the final agreement is signed, the buyer and seller should visit the property to ensure they are jointly agree on all items included in the sale, as well as the determine for the completion of the sale and handover of the property.

Once the Agreement is signed, the buyer takes responsibility for insurance. It is often stipulated in the mortgage that insurance must be in place before money is released to the vendor.

Taxes, fees and charges

There are a number of costs associated with property transactions. These include:

• property agency fees (typically one percent of the sale price but negotiable)
• solicitor's fees (negotiable)
• stamp duty (roughly 0.75 percent to 3.75 percent of the property's value) must be paid within 30 days of purchase; the Inland Revenue Department provides comprehensive instructions on how to calculate stamp duty
• search costs; the Land Registry provides a table detailing search of land costs
• deed registration costs; the solicitor should arrange for deed registration under the Land Registry so that the property is filed in the lodgement list
  • For details of associated fees: Click here
• insurance
• quarterly government rates
• property tax; owners who derive rental income on owned properties must pay property tax, calculated according to the net value of the property for the given year
  • For a guide to calculating property tax: Click here
• mortgage arrangement fees
• property management fees, levied by building management to cover electricity, security and other miscellaneous maintenance costs

Selling a Property

Listing the property

There are several places property owners can go to advertise the sale of a property. The most obvious is through an estate agent, who will list the property in a database shared with agents across Hong Kong. The agent will handle negotiations and the sale in exchange for a commission agreed up-front, which is negotiable but usually one percent of the value of the property. The owner can opt to leave a set of keys with the agent to show the property to potential buyers.

There are also property listing pages in various newspapers, magazines and websites. In these cases, the owner will not have to pay commission to an agent, but will have to be present when any potential buyer wishes to view the property.

Accepting an offer

After a price has been agreed upon and all details of the transaction discussed, the vendor should receive a signed copy of a binding provisional agreement that attests to the buyer's promise to purchase the property, as well as the price and any other necessary details. A non-refundable deposit will be put down by the buyer at this point. After this, a Sale and Purchase Agreement will be drawn up for approval. It is wise for the seller to have a solicitor look through this document and ensure that all conditions are properly agreed upon and that the seller's interests are protected.

Before the final agreement is signed, the buyer and vendor should visit the property and jointly agree on all items included in the sale, as well as the date for the completion of the sale and handover of the property. Of course, if there are existing tenants in the property, the visit may not be possible, but terms regarding the tenants must be included in the contract.

Taxes, fees and charges

According to the Inland Revenue Department, all profits earned from the sale of property in Hong Kong are subject to Profits Tax and must be declared to the government. 

• The government provides an online calculator that will estimate the tax for the year: Click here

Information approved by Savills Hong Kong Residential Sales
General Hotline Tel: 2842 4478 / e-mail / www.savills.com.hk

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