Thursday, 13 April 2017

Closing Loopholes Too Late?

A potential buyer checks out the models for Harbour Glory in the showroom
The Leung Chun-ying administration thought it was clever when it announced Tuesday evening that first-time home buyers could not purchase multiple flats without paying the 15 percent stamp duty.

Starting midnight on Wednesday morning, it has changed to one flat per person, but now buyers are skirting the issue by having entire families show up and buying a flat in each of their names.

On Wednesday, a family bought three flats at Harbour Glory, Cheung Kong's latest project in North Point. The three units together totaled HK$170 million (US$21.8 million), and to avoid paying the 15 percent stamp duty, the purchases were put under three individual names.

"It's not illegal, but it's creative," said Sammy Po, chief executive of Midland Realty's residential department. "Whenever there's a new policy, buyers and sellers always come up with a new way to minimize the impact."

A show flat demonstrating one of the bedrooms
His firm brokered two groups of customers each buying two units of three-bedroom apartments at Harbour Glory.

One group was a father and son, they had never bought HK flats before, and each bought 1,062 sq-ft flats at Harbour Glory for a total of HK$60 million, after a 34 percent discount from the developer.

"As the two flats were bought in two separate contracts, and neither of them owned properties under their names, they are not subject to the 15 percent stamp duty," said Po. Each buyer had to pay 4.25 percent duty, or HK$1.27 million.

The Hong Kong government had hoped that this latest measure would curb the number of flats being sold, which some critics said was too little too late.

Secretary for Transport and Housing Professor Anthony Cheung Bing-leung said the introduction of the 15 percent stamp duty was an attempt to curb the rise of housing prices, but they soon realized some buyers took advantage of buying multiple flats under one purchase.

He claimed the government was aware of the issue all along, but needed time to gather more data and monitor the situation.

Harbour Glory is Cheung Kong's project in North Point
"We have adopted the most cautious approach to handling [the issue]. We did not leave the loopholes unattended," Cheung added.

The percentage of such cases increased to 4.7 percent between December last year and March this year, up from 3.4 percent in 2013 and 2014.

Just last month alone there were 184 cases of multiple flats bought under one transaction, involving a total of 435 flats.

"Before November, such trends were not something to be concerned about," Cheung said.

But pan-democrat lawmaker James To Kun-sun, who first warned of the need for cooling measures back in 2013, said the latest measures were "too late".

It's funny how the Hong Kong government doesn't question where people get gobs of cash to buy multiple flats, and thinks it needs to monitor the situation for a while? Meanwhile the prices of flats continue to rise, effectively making the government's measures seem half-hearted, at worse a joke.

This is an indication of how government officials have no idea how the average Hong Kong person lives, or don't have the ordinary resident's best interests at heart.

How is chief executive-elect Carrie Lam Cheng Yuet-ngor going to deal with the issue? Judging from her toilet paper buying fiasco, one thinks she also has her head up in the clouds...




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