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5 de março de 202413 minute read

Hong Kong Budget 2024-2025: Highlights of Key Property Measures

The Financial Secretary of Hong Kong, Paul Chan Mo-po, announced the Hong Kong Budget 2024 (Budget) on 28 February 2024. The Budget covers a wide range of property-transaction-related initiatives aimed at reshaping and boosting property transactions and fostering a more favorable environment for both buyers and sellers in Hong Kong. A transcript of the Budget can be found here.

The Hong Kong Monetary Authority (HKMA) also introduced countercyclical macroprudential measures for property mortgage loans on the same date.

Below is a summary of the alterations to the stamp duties and property financing regulations introduced in the Budget and by the HKMA.

 

Lifting of All Demand-Side Management Stamp Duties on Residential Properties

With immediate effect from 28 February 2024, all demand-side management measures for residential properties, including the Buyer's Stamp Duty1 (BSD), New Residential Stamp Duty (NRSD)2 and Special Stamp Duty3 (SSD) that ranged from 10% to 20% have been lifted. Sale of immovable properties in Hong Kong would only be subject to Ad Valorem Stamp Duty (AVD) which is now aligned and payable at Scale 2 rates from HKD100 up to 4.25% of the consideration or value of the property. Please see below a summary table for illustration purposes.

 
Consideration (HKD) AVD (HKD) (equivalent scale applicable to non-Hong Kong permanent residents) BSD NRSD
Exceeds Does not exceed / N/a N/a
/ 3,000,000 100
3,000,000 3,528,240 100 + 10% of excess over 3,000,000
3,528,240 4,500,000 1.5%
4,500,000 4,935,480 67,500 + 10% of excess over 4,500,000
4,935,480 6,000,000 2.25%
6,000,000 6,642,860 135,000 + 10% of excess over 6,000,000
6,642,860 9,000,000 3%
9,000,000 10,080,000 270,000 + 10% of excess over 9,000,000
10,080,000 20,000,000 3.75%
20,000,000 21,739,120 750,000 + 10% of excess over 20,000,000
21,739,120 / 4.25%

 

It is anticipated that the lifting of the demand-side management stamp duty measures on properties that have been in place for over a decade may help stabilize the downward trend of property price and volume of trade to reflect the genuine demand of residential properties in the market.

 

Softening of Property Mortgage Loan Measures

With immediate effect from 28 February 2024, the HKMA adjusted the countercyclical macroprudential measures for property mortgage loans and other related supervisory requirements.

For residential properties for self-occupation, the maximum loan-to-value (LTV) ratios will be adjusted to 70% for properties valued at HKD30 million or below; 60% for properties valued at HKD35 million or above; and a gradual scale between 70% to 60% for properties valued between HKD30 million and HKD35 million. For non-self-use residential properties, the maximum LTV ratio will be adjusted from 50% to 60%.

For non-residential properties, the maximum LTV ratio will be adjusted from 60% to 70%.

For mortgage loans assessed based on the net worth of mortgage applicants, the maximum LTV ratio will be adjusted from 50% to 60%. This adjustment is applicable to both residential properties and non-residential properties.

For property development projects, the overall financing caps will be increased from 50% of the expected value of the completed properties to 60%, within which the financing cap for the value of the property site will be increased from 40% to 50% and the financing cap for construction cost will be increased from 80% to 100%. The existing requirement for banks to set aside additional capital for exposures to property developers which offer mortgage financing with high LTV ratios will also be lifted.

Please see below a summary table for illustration purposes for the above measures as announced by the HKMA.

Property type Maximum loan-to-value (LTV) ratios
Residential (Self-occupation) Properties valued at HKD30 million or below 70%
Properties valued between HKD30 – 35 million Gradual scale from 70% to 60%
Properties valued at HKD35 million or above 60%
Non-self-use residential All properties 60%
Non-residential All properties 70%
Mortgage loans based on net worth All properties (both residential and non-residential) 60%
Interest rate stress testing requirements All properties Suspended
Financing caps for property development projects Overall financing cap (expected property value) 60%
Property site value 50%
Construction cost 100%

 

It is anticipated that these adjustments will align property financing regulations with the current property market situation and provide flexibility for borrowers and developers.

 

Other Notable Changes announced in the Budget

Noteworthily, the Budget proposed to allow tax reduction under Profits Tax for expenses incurred in reinstating the condition of leased premises to their original condition, effective from the year of assessment 2024/2025. This may pose as a positive news to businesses operating in leased properties to reduce the costs incurred in reinstatement.

On land supply, the 2024‑25 Land Sale Programme will cover a total of eight residential sites, two commercial sites and one industrial site. There will also be railway property developments, private development and redevelopment projects as well as projects undertaken by the Urban Renewal Authority.

The Budget proposed also to remove the time limit for claiming commercial building allowance (CBA) and industrial building allowance effective from the year of assessment 2024/2025. At present, the time limit for such claim is twenty-five years where no capital expenditure could be deducted for a commercial or industrial building that had been in use for over twenty-five years.

Lastly, the Budget proposed to extend the Grand Scheme for Open-ended Fund Companies and Real Estate Investment Trusts for three years with a task force to be set up to further develop the asset and wealth management industry. It is anticipated that this may enhance preferential tax regimes for funds.

 

Towards Lighter-Touch Property-Related Regulations

We note financial institutions, the real estate industry and the public in general welcome the softer-touch approach towards regulations governing the property market in Hong Kong. As always, it is essential for clients to stay informed about evolving regulations and seek professional advice when navigating the property transactions in Hong Kong.


BSD is applicable to non-Hong Kong permanent resident buyers, levied at a rate of 7.5%.
NRSD is generally applicable to buyers who are not Hong Kong permanent resident buyers that do not own other residential property(ies) in Hong Kong at the time of the acquisition, levied at a rate of 7.5%.
3 SSD is applicable to those who dispose of his/her residential property within 2 years after acquisition, aimed at discouraging speculation and quick turnover transactions.