PAPT to cover sale and purchase of residential properties in secondary market

The Payment Arrangements for Property Transactions will cover the sale and purchase of residential properties in the secondary market of Hong Kong, effective from February 28,  Hong Kong Monetary Authority, Hong Kong Association of Banks, Law Society of Hong Kong and Estate Agents Authority jointly announced on Thursday.

Under PAPT, the buyer's mortgage loan proceeds will be transferred to the seller's bank through the interbank electronic payment system, enabling the seller to receive the sale proceeds on the completion day at the earliest, compared to the conventional payment method in which mortgage loan proceeds need to be settled via the solicitors' accounts using physical cheques.

Buyers and sellers who wish to use PAPT may request their estate agents to incorporate relevant clauses into the provisional S&P agreement.

The new arrangement will mitigate the credit and operational risks faced by the banking sector when conducting mortgage business, said Arthur Yuen Kwok-hang, Deputy Chief Executive of HKMA.

HKAB said there are currently no plans to charge additional fees for related services, and HKMA noted that not many additional costs are involved of the expansion.

The HKMA stated that there are not many additional costs involved in terms of processes and systems. The Hong Kong Association of Banks indicated that there are currently no plans to charge additional fees for related services.

Sun Yu, Chairman of the hkab, said that an average of over 75 percent of refinancing transactions have adopted PAPT in the past six months, showing a wide recognition in the market.