HONG KONG’S government is considering the removal of billions of dollars worth of tax exemptions in a proposal that threatened to deal a blow to housing developers and major landlords.
On Tuesday, the Legislative Council received a plan for developers and rich owners of multiple properties to receive fewer concessions on tax rates.
According to the South China Morning Post, under the new plan, the concessions would be granted on one property per owner, unlike the current approach whereby they receive a rebate for each property owned.
The proposal came amid allegations that the government favours the wealthy with the concessions and the trend among private developers in hoarding unsold flats.
By limiting the concessions to one property per owner the Financial Services and the Treasury Bureau hops to “address the perception that property developers and owners with many rateable properties would receive a considerable sum of rates concessions under the current mechanism”.
Hong Kong has recently topped the list as the most expensive global ultra-prime real estate market for the world’s super-rich, according to new research by Knight Frank.
The average price paid for the upscale properties, according to Knight Frank’s Global Ultra Prime Market 2019 assessment, was US$64 million over the past three years.
The former British colony attracts a large number of expatriates to live and work owing to its reputation as an international finance centre and in the 12 months to August 2018, Hong Kong was home to 47 transactions – the highest of any city.
With the demand for properties high in the densely populated area and real estate prices more expensive than the rest of the world, Hong Kong’s property market, however, is riddled with monopolies.
The government had previously estimated that the island city’s top 10 landlords owned a staggering 40,000 properties collectively and benefitted from more than HK$256 million US$32.58 million in tax waivers.
One unnamed developer is said to own 15,645 properties and is expected to receive HK$102.6 million in rates concessions.
However, the new measure will likely not be a major deciding factor for developers to hold on to their flats former president of the Institute of Surveyors, Raymond Chan Yuk-ming, was quoted as saying.
“It would increase their costs, but not so substantially that it would be a major consideration for them to immediately sell or lease out their flats,” Chan said.
An owner of two properties in the city protested the changes on a Hong Kong radio programme.
“If the government was going to be stingy, they should just not offer any rates rebates to anyone at all. Let all the money go to poverty alleviation,” he said.