HK says no plan to cut stamp duty after Regina Ip floats idea

Hong Kong said it had no plans to relax the stamp duty on home purchases, following comments from a top government adviser that it was among policies under consideration to shore up the economy.

“Mainland professionals have been clamoring for the double stamp duty to be waived for them, even before they acquire the right of abode,” Regina Ip, convenor of the government’s advisory Executive Council, told Bloomberg Television on Tuesday. “It is all a raft of measures under consideration and this is certainly something that the government could consider.”

Ip’s comments triggered a rally in local developer shares. The stocks pared gains after the government said in a statement it didn’t plan to reduce property taxes.

“Regarding reports that the government is considering the relaxation of stamp duties for property, the government clarifies that there has not been discussion on the matter, and points out clearly that there are no relevant plans,” according to a statement.

Foreign buyers of residential property need to pay a 30% levy on all purchases under measures introduced in the past decade to cool home prices. Waiving the double stamp duty may reduce that to 15%.

Ip later clarifies that her comments were not referring to any specific measure under consideration by the government. She was commenting on possible measures the government could adopt to attract more talents to settle in Hong Kong. 

More specifically, she said she was referring to the “Buyer's Stamp Duty (BSD)” , which is an additional upfront tax on non-permanent resident buyers imposed by the government in 2012. 

Ip stresses that the possible waiver of BSD for mainland talents and professionals to encourage them to settle in Hong Kong is one of the recommendations which New People’s Party, of which she is the Chairperson, would submit to the Chief Executive next month as part of the CE’s consultation on his Policy Address 2022. 

Home sales slumped about 57% by value in July from a year earlier, according to the city’s Land Registry. Rising interest rates and a worsening economy are projected to weigh on property prices in one of the world’s most expensive real estate markets. Goldman Sachs Group Inc. predicts home prices could fall 20% over the next four years.

Ip also acknowledged the benefit that would stem from ending hotel quarantine requirements by November, when a global banking summit and an international rugby tournament are planned.

“It’s a highly desirable goal - we all hope we could make it, but everything has to depend on a scientific approach based on the data, and we have to brace for other eventualities,” Ip said.

Hong Kong is battling to regain its status as a global aviation and commerce center after years of strict Covid border controls isolated the former British colony and fueled an exodus of residents. The city’s economy is projected to shrink this year for the third time in four years.

The city’s leader on Monday reduced mandatory hotel quarantine for international travelers, slashing it to three nights from seven. While that move was welcomed by business groups and analysts, it was seen as insufficient given rival financial hubs have already opened their borders.

(Staff reporter and Bloomberg)