All questions

Real estate ownership

i Planning

The Town Planning Board is a statutory body established under the Town Planning Ordinance tasked with guiding and controlling the development and use of land and types of buildings suitable for erection, preparing new draft zoning plans, exhibiting draft plans for public comment, considering applications for planning permission and submitting draft plans for approval by the Chief Executive in Council. Its executive functions are carried out by the Planning Department, which is responsible for creating plans on behalf of the Town Planning Board, providing technical services and enforcing zoning restrictions. The Town Planning Appeal Board hears appeals against the Board's decisions to reject planning applications.

In March 2021, the Development Bureau (DEVB) launched a two-year pilot scheme for charging land premiums at standard rates for government grant modifications on redevelopment of industrial buildings (IBs) (which was subsequently extended for a year). This scheme is to encourage revitalisation of IBs. IBs constructed before 1987 would fall within the scheme. Standard rates are set for IBs existing in five regions in Hong Kong and three types of uses involved in lease modifications for IBs, which are for commercial, modern industrial and residential use after redevelopment. Therefore, IB owners are provided with an alternative to the conventional mechanism for premium assessment to expedite revitalisation of IBs.

In light of the positive response from the industry towards the pilot scheme, the DEVB further announced in March 2022 the extension of the use of standard rates in land premium assessment to lease modification applications in new development areas. The Chief Executive of Hong Kong (Chief Executive) further announced in the 2022 Policy Address that the government will regularise the arrangement for charging land premium at standard rates for redevelopment of industrial buildings, and a plan to further extend the approach to agricultural land in the New Territories located outside new development areas is proposed to be presented by mid-2023.

ii Environment

The environment is an issue of significance for town planning and land development in Hong Kong. Governmental supervision is generally by way of proper land use planning, along with appropriate controls at the source through licensing and enforcement of environmental protection ordinances. Environmental planning is an early consideration when the government scrutinises and considers approving land use plans. The government review focuses on the impact of the development on air, noise, water and waste pollution levels.

Development projects that have the potential to cause significant damage to the environment may be classified as designated projects under the Environmental Impact Assessment Ordinance and are required to follow the statutory environmental impact assessment process to obtain the requisite environmental permits before construction and operations commence.

iii TaxStamp duty on disposition of immovable property

There are three types of stamp duty that may be applicable to the sale of property in Hong Kong. The ad valorem stamp duty (AVD) is applicable to all dispositions of immovable property. The government also introduced a special stamp duty (SSD) and a buyers' stamp duty (BSD) with effect from 20 November 2010 and 27 October 2012 respectively for the sale of residential properties. SSD and BSD were introduced with the aim of cooling the overheating residential property market.

The parties legally liable to pay AVD, BSD or SSD are defined under the laws of Hong Kong. However, it is customary for a contract for sale to stipulate that the purchaser will pay the AVD and BSD and the vendor will pay the SSD.

Effective from 27 October 2012, BSD is payable on a contract for sale or a conveyance on sale of any residential property. BSD is charged at 15 per cent on the consideration or the market value of the property (whichever is higher). The BSD is subject to specific exemptions, including the sale of the property to a Hong Kong permanent resident. Any residential property acquired and resold within certain holding periods, up to 36 months, will be subject to SSD ranging between 10 to 20 per cent of the value and consideration of the property, depending on the timing of resale.

AVD for residential properties has been increased to a flat rate of 15 per cent on the consideration or the market value of the property (whichever is higher). Persons who qualify for a lower rate of AVD must satisfy certain exemption criteria stipulated by the government. Examples of this exemption are when the buyer is a Hong Kong permanent resident and is not a beneficial owner of any other residential property in Hong Kong at the time of acquisition of the residential property, or the buyer has divested himself or herself of ownership of all other residential property in Hong Kong within six months.

On 11 April 2017, the government tightened up measures on the existing exemptions to the effect that, unless specifically exempted or otherwise provided in the law, acquisition of more than one residential property under a single instrument executed on or after 12 April 2017 will be subject to the proposed new AVD flat rate at 15 per cent. The government abolished the double AVD on non-residential property transactions in November 2020, which means that non-residential property transactions will attract the same stamp duty rates as those residential property transactions that qualify for lower rates of AVD. The lower rates of AVD range from 1.5 to 4.25 per cent, depending on the value of non-residential property.

In the 2022 Policy Address, the Chief Executive announced that, starting from 19 October 2022, eligible incoming talents who subsequently become a permanent resident upon residing in Hong Kong for seven years can apply for a refund of BSD and the new AVD paid for the first residential property purchased that they still own, while the lower rate of AVD is still payable such that the overall stamp duty charged will be on par with that charged on first-time home buyers who are ordinary permanent residents.

Stamp duty on transfer of Hong Kong stock

The acquisition or transfer of shares in a property holding company is not subject to AVD, SSD or BSD. However, parties involved in such acquisitions or transfers must pay stamp duty at the following rates if the transfer directly involves Hong Kong stock:


Contract note for sale or purchase of Hong Kong stock

0.13 per cent of the amount of the consideration or of its value on every sold note and every bought note

Transfer operating as a voluntary disposition inter vivos

HK$5 + 0.26 per cent of the value of the stock

Transfer of any other kind


The parties legally liable to pay stamp duty on the transfer of Hong Kong stock are defined under the laws of Hong Kong. Customarily, the stamp duty is borne by the buyer and the seller in equal shares.

Rates and government rent

Owners of Hong Kong properties will also have to pay rates and government rent on their real estate assets.

Rates are a tax on the occupation, use or holding of property. They are charged at a percentage of the rateable value, being the estimated annual rental value of a property at a designated valuation reference date, assuming that the property was vacant and to be let out. The rates percentage charge is determined by the Legislative Council. For the 2022–2023 financial year, the rates percentage charge is 5 per cent.

The basis of the government rent is derived from the government lease or grant, which provide that rent is payable to the government. The government rent is calculated at 3 per cent of the rateable value of the property situated on the land leased and is adjusted with any subsequent changes in rateable value.

Property tax (levied on rental income)

Property tax is levied on property owners on the rental income derived from Hong Kong property. The tax is assessed on the net assessable value of the rental income. The current property tax rate is 15 per cent.

Vacancy flat tax

In April 2021, the government stated that a plan to introduce a private residential vacancy tax could be revived. The proposed tax, first introduced in 2018 as a way to deter developers of new residential buildings from hoarding residential flats, would only target developers to prevent housing shortages, but not homeowners. First-hand homes that remained unsold for 12 months after issuance of an occupation permit would fall within the ambit of the proposed tax, although no timeline has yet been set for the proposal to revive the introduction of the private residential vacancy tax.

iv Finance and security

The financing of a real estate asset acquisition will usually involve the lender taking security over the property by way of a mortgage or a charge. The distinction between a mortgage and a charge is historical whereby the mortgagee has legal and equitable interest in the land subject to the mortgagor's right of redemption as compared to a charge having certain rights, such as the right to sell, but legal and equitable interest still belongs to the chargor. Since 1984, a legal mortgage can only be created by way of a legal charge and the Conveyancing and Property Ordinance grants the holder of a mortgage by legal charge the same rights as a historical mortgagee.2 Other property-related securities that are commonly procured in property financing transactions include assignments of sale proceeds, assignments of rental income and assignments of insurance proceeds. The security documents that affect an interest property directly will constitute a registrable encumbrance on the property and should be registered with the Land Registry to establish the chargee's priority interest.