Vacant-flat tax back in focus to deter hoarders

Top News | Maisy Mok 15 Apr 2021

A plan to introduce a vacancy tax to deter developers from hoarding new flats could be revived, says the Secretary for Transport and Housing, Frank Chan Fan.

The government shelved discussion of the tax in October, citing the ailing economy and a split in public opinion. Although little has changed amid the pandemic, Chan told lawmakers yesterday he would not rule out tabling the vacancy tax bill again.

He was responding to a question by Leung Che-cheung, of the Democratic Alliance for the Betterment and Progress of Hong Kong, who asked what the government will do to reduce unsold first-hand private residential units and whether the vacancy tax will be reintroduced.

Chan said the government has been collecting more data about vacant flats "to grasp the actual situation [and] make arrangements for relevant policy." He added: "We will not rule out reintroducing the vacancy tax based on the current development."

The number of unsold first-hand private residential flats in completed projects went up 24 percent from 9,900 units by the end of 2019 to 12,300 units by the end of last year, latest Transport and Housing Bureau figures show.

The government proposed the vacancy tax in June 2018 over concerns that developers are hoarding flats after they are completed amid the housing shortage.

Under the proposal, developers of first-hand private residential units with occupation permits issued for 12 months or more have to provide annual returns to the Rating and Valuation Department on the status of the units.

If the flats are unsold or not rented out for 183 days or more in aggregate for 12 months, developers will need to pay special rates - chargeable at a flat rate of 200 percent of the rateable value of the unit.

The government decided not to proceed with the proposal after taking into account the economic situation and "strong and differing views in the community."

But the situation appeared to take a turn after Vice Premier Han Zheng - the top Beijing official in charge of Hong Kong affairs - said the city's housing problem needs to be solved.

Han made the remarks to the Hong Kong delegation on the sidelines of the National People's Congress in March.

Chan also said the government will unveil its partition flat rental policy by the end of the month.

The task force for the study on tenancy control of subdivided units submitted its report to the government last month, proposing to ban landlords of subdivided flats from increasing the rent in the first two years of tenants moving in. The rental increase will be capped at 15 percent after that. Lawmakers told Chan that 15 percent is too high.

About 226,000 people live in 100,943 subdivided units in Hong Kong.

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