Below we have some helpful information on buying real estate in Hong Kong and what the process involves. Our legal team can guide you through the whole process very simply so you that you do not unwittingly fall into any traps due to a lack of understanding.
No restrictions on foreign ownership. But with more Stamp Duty on Residential Properties!
There are NO restrictions. Foreigners are permitted to own any land or properties in Hong Kong without any restrictions. However, non-permanent residents buying residential properties in Hong Kong have to pay a very high stamp duty to the tax authority thus making it uneconomical to buy. Foreigners are more desirable to invest in non-residential properties such as shops, offices and industrial buildings.
Owned by a person, joint names or by a limited company
The nature of ownership is not freehold but rather a long leasehold. For example, land situate in the New Territories has a lease term up until year 2047. In Hong Kong, you have the option to buy as an individual (including joint names with your spouse) or through a corporation. For large projects, its best to own property through a Hong Kong corporation. Using limited companies to hold properties have to pay more stamp duty.
Step One: Confirm the title
People usually find a property through an estate agent. On finishing negotiation, the estate agent will arrange you to pay an initial deposit (which is usually up to 4% of the purchase price) and to sign a provisional agreement for sale and purchase with the seller. A provisional agreement for sale and purchase consists of pre-printed standard terms widely adopted in the property market.
Before the signing, the first thing you need to do is confirm the legal owner of the property. This is done by making a title search at the Land Registry which is a Government department deposited with all property instruments on land. Either the estate agent or your lawyer may do that on your behalf.
Step Two: Checking the Title
Hong Kong does not practise title registration. Owner's title is not proved by a title certificate. To ascertain the title, you need a conveyancing lawyer to investigate the title by perusing all instruments relating to the property you intend to purchase. Title investigation is usually done by your lawyer after the signing of the formal agreement for sale and purchase.
Step Three: Signing of Formal Agreement for Sale and Purchase
After you have signed the provisional agreement for sale and purchase, the estate agent will help you to pass its copy to your lawyer. Your lawyer will then contact the seller's lawyer. They will negotiate and agree on the terms of the formal agreement for sale and purchase. After agreement, your lawyer will arrange you to sign it and at the same time arrange you to pay the balance of deposit. By this stage, you will have paid a sum equal to 10% of the property price.
Step Four: Registration of the Formal Agreement for Sale and Purchase
Your lawyer will cause the registration of the formal agreement for sale and purchase at the Land Registry to protect your interest in the property.
Your lawyer will eventually receive the title instruments from the seller's lawyer. He will check the title and give advice you on its title aspect. He may do updated search at the Land Registry if necessary and raise title questions to the seller's lawyer to answer.
Getting clean title to property can be a problem and therefore you need an experienced conveyancing lawyer.
Our Conveyancing Team
Our conveyancing legal team stands ready to assist you in completing the title acquisition of the property you intend to purchase. We have extensive experience and skill sets on dealing with purchase of houses, apartments, commercial properties such as offices and factories.