Hong Kong’s legislature on Thursday passed a stamp duty amendment bill allowing homeowners holding two flats a total of 12 months, up from the original six months proposed in the government’s amendment, to offload their first property to avoid paying the tax.
The Stamp Duty (Amendment) Bill also allows the authorities to impose a flat 15 per cent stamp duty tax, up from the previous range of 1.5 to 8.5 per cent, on non-first-time homebuyers.
The new tax rate has been in effect since November 2016, after then chief executive Leung Chun-ying rolled out the measure in an attempt to cool a red-hot property market in the world’s least affordable city.
The tax covered non-first-time individuals and corporate buyers. A government amendment allowed the buyer of a second flat to obtain a full rebate if they managed to sell their first flat within six months of the new flat being bought. The policy was designed to encourage people to give up flats they did not live in so they would be available on the market.
Some lawmakers, such as Democratic Alliance for the Betterment and Progress of Hong Kong vice-chairman Holden Chow Ho-ding, had said that six months was not long enough for people to offload their first property and suggested that the rebate period be extended.
On Thursday, the Legislative Council passed an amendment from Chow, who sought to extend the stamp duty exemption period to 12 months.
Derek Chan, head of research at property agent Ricacorp Properties, said he had yet to see whether the extended exemption period would have an actual effect.
But he said it could at least ease the pressure facing homeowners who planned to change flats. Allowing more time for the switch might therefore encourage them to do so.
Chan said he expected to see 5 to 10 per cent growth in the supply of small and medium-sized flats in the near future.