Occupying a unique place in UK and Chinese history, the Hong Kong Special Administrative Region (HKSAR) is an attractive option to foreign property buyers. The city of Hong Kong has a historic pedigree as a diverse place to live due to its complex relationships with Britain and mainland China.
When it comes to living in Hong Kong, there are a number of points to be aware of, but with these noted, you can quickly start on the path towards buying property in Hong Kong.
First things first – it can be much easier to buy property in Hong Kong if you are a permanent resident. This is true if you want to live in the region or are just planning on making an investment for rental purposes, for example.
It can be quite a lengthy process to obtain the right to abode, however, as the applicant has to have lived in Hong Kong for seven years. Persons of non-Chinese descent must also declare Hong Kong as their place of permanent residence.
If you are intending to rent a property in Hong Kong, there are fewer barriers to foreigners and some condominiums can even be legally bought and rented out under government guidelines.
In term of the types of property available, while there are new developments popping up all the time in Hong Kong, the most readily available type of housing are apartments.
When contacting an estate agent to be shown around potential properties, it is quite usual to be shown a number of residences on an agent’s books, rather than just the kind of apartment you desire. Additionally, multiple agents can have the same property on their lists, which may mean that the same place is being offered at different prices.
This means that it is key to shop around when house or flat-hunting in Hong Kong if you want to get your property for the best possible price.
As many apartments in Hong Kong are economical in terms of space, it can mean having to get creative with furnishings. The region is therefore dotted with custom furniture makers. These companies can build to specification, tapping into the trend of maximising on available space with stylish efficiency.
This could mean getting a specific size of sofa to fit perfectly into a niche, or a made-to-order bookcase that doubles as a space-saving media console. As a less individual solution to the issue of maximising on space, there a number of IKEA stores around Hong Kong’s built up areas which can offer cheaper solutions for space-efficient furniture.
Something to be aware of when it comes to buying in Hong Kong is that foreign purchasers can be subject to extra taxes not applied to locals. Running through the taxes applicable to foreign buyers has been Vincent Cheung of Colliers International;
“If a property agreement is executed by any [foreigner], or owner of any existing residential property, the proposed new stamp duty of 15% would be applied to an agreement or conveyance for a residential property. For a residential property sale or conveyance executed on or after October 27, 2012, the [foreigner] also needs to pay the buyer’s stamp duty (BSD) at a rate of 15% of the consideration or the value of the subject property, whichever is higher”.
Cheung has added that there is no exemption for first-time foreign buyers in Hong Kong, unless they are a permanent resident. On the positive side, Cheung has clarified that mortgage application successes are typically dependent on;
‘your annual income and income source [local versus overseas], the consideration value of the property, nature of the property, number of properties owned, value of assets owned [and] your credit score or rating, rather than your nationality or place of residence’.
It should be noted that in Hong Kong, purchase prices and rental prices can seem extremely high compared to the UK average, even for more in-demand places like London.
The positive aspect to this situation, however, is that Hong Kong’s tax brackets are comparatively low when set against the UK’s. While the UK basic rate is 20%, the standard rate in Hong Kong is 15%, although depending on circumstances, expats could be taxed at anything from 2% to 17%. At any rate, this puts Hong Kong’s taxes lower than the UK’s and the lack of a capital gains tax in the region adds to the benefits.
This article offers a little insight into buying property in Hong Kong, but if you’re planning to invest in the region make sure you do extensive research far in advance to make sure you’re in possession of all the facts and essential information.