What happened? The Hong Kong government has unveiled plans to raise property taxes for luxury homes. The innovations will affect the wealthy owners and landlords of several real estate properties.
Luxury housing sales in Hong Kong have reached a historic high. Mainly at the expense of foreign investors. Prices are constantly rising.
The prospects. Finance Minister Paul Chen has proposed gradually raising the tax rate for the most expensive homes in Hong Kong. This would replace the standard tax of 5% of the annual rental value of the property.
The plan will affect about 42 thousand homes or 2% of the total number of private residential properties. The change is expected to generate about $97.4 million in government revenue per year when it takes effect in 2024.
Details. While the property tax will apply to all homeowners, the change could mainly affect large owners with luxury homes for rent, said Bloomberg Intelligence real estate analyst Patrick Wong.
The government's plan to raise the property tax came after a similar announcement by Singapore, which plans to receive about $283 million in tax revenue annually.
At the same time, the Hong Kong government plans to simplify homeownership by allowing first-time buyers of more expensive real estate to make a down payment of 10%. Under the new policy, the Hong Kong Mortgage Corporation will insure loans for homes worth up to $1.3 million, compared with $1 million currently.
According to the head of the Evaluation and Consulting Services department of the Hong Kong office of Colliers International Group Inc. Hannah Jeong, this policy will lead to an immediate increase in transaction volume. But the expert believes that prices may remain at the current level due to the situation with Covid and a less positive economic outlook.
Source: Bloomberg