In the Budget 2024-2025, the Hong Kong government cancelled all demand-side management measures for residential properties with immediate effect from 28 February 2024.
In other words, there is no more special stamp duty (SSD), buyer’s stamp duty (BSD) or new residential stamp duty (NRSD) is payable for residential property transactions. Buyers and sellers of residential properties are now required to pay ad valorem stamp duty (AVD) at the same rates as Scale 2 rates (from HK$100 up to 4.25% of the consideration) as follows.
| Consideration (HK$) | AVD HK$ | |
| Exceeds | Does not exceed | / |
| / | 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% |
As a result, the property market has been enlightened however yet can reflect its long-term impacts. Nevertheless, the above arrangements of Budget 2024-2025 might have some effects on the residential property market in Hong Kong.
Company buyer before Budget 2024-2025 may be required to pay SSD and BSD which may up to 30% of the purchase price of property. After the relief of SSD and BSD, buyer may consider purchasing residential property by company instead of individual in light of transfer and management of residential property and stamp duty consideration for future transfer using transfer of company shares tax rate instead of AVD.
Buyer may focus on purchasing the one property due to SSD and BSD consideration. After Budget 2024-2025, the stamp duty of purchase of residential property under HK$3 million is HK$100. Also, buyer purchases more than one residential property is no longer subject to SSD and BSD. Therefore, with the same financial budget for purchasing residential property, the buyer may consider to purchase several properties with less values per property instead of one property with the same value of consideration.
Mortgage measure is one of the important considerations of potential residential property purchasers. After Budget 2024-2025, for self-use residential property valued at HK$30 millions or below, the maximum Loan-to-Value (LTV) rations is revised from 60 to 70% and the LTV ratio for all values of non-self-use residential property was revised from 50% to 60%. Depending on planning of each owner of properties and subject to banks’ approval, they may consider remortgage to refinance 10% of loan for other investments.
Residential property market sentiment in Hong Kong is cautious since the middle of 2023 amid rising interest rates and an external environment fraught with uncertainties. Thereafter, how the market adopt the Budget 2024-2025 will be subject to many variables.
