As bargains emerge, are you thinking of buying a property in Hong Kong now? For those who are new to the Hong Kong housing market, the best is to prepare yourself by consulting with your real estate agent and financial advisor about your options.

The first thing you need to note is that, as with some other countries that discourage property speculation, the Hong Kong government imposes stamp duty surcharges on foreigners and second home buyers, meaning there’s quite a big difference in upfront costs between buying as a Hong Kong permanent resident and a non-permanent resident, and between buying your first home and a second home.

Stamp duty surcharges apply to foreigners and investors

Hong Kong permanent residents buying their first home enjoy the lowest 4.25% stamp duty rate. Second-home buyers are required to pay an extra 15%. Nonpermanent residents and corporate buyers are required to pay a 15% + 15% stamp duty rate. Excluding the down payment, other upfront expenses include the agent fee, typically charged at 1% of the purchase price, plus a solicitor’s fee typically charged at about 0.1-0.2% of the purchase price.

Find out how much you can borrow first, in case you have to

The good news is, there are no other restrictions on property ownership by foreigners. And unless you intend to buy the home in cash, we recommend that you consult with your financial advisor to find out how much you can borrow first. The most common conditions a bank looks for in borrowers include age, buying as residence or investment, employment (income earner vs. business owner), income stability, assets and debts, and credit score.

Start searching for a home

Now that you have an idea of how much you can borrow, it’s time to start looking for a home to buy. Check out our website and you will discover a wealth of properties listed for sale. Popular neighbourhoods include The Peak, Mid-Levels, Southside such as Repulse Bay and Stanley, as well as Pokfulam, all of which boast excellent connectivity to major commercial districts and access to international schools.

Across the Victoria Harbour are more affordable housing districts, such as Kowloon West, a well-planned neighbourhood dominated by high-rise complexes above and near the Kowloon, Austin and Olympic stations. Elsewhere, low-density housing in Sai Kung and Clear Water Bay, along the coastline of eastern New Territories, is ideal for those looking for a country setting with a slower pace of life.

Are you looking for a buy-to-let?

Different from buying a home for yourself, buying a home with the intention of letting it requires you to undergo a “thought experiment”. Who you target to let your property to? If it’s going to be an expat professional working for an MNC, chances are that he or she prefers a one-bedroom in a convenient location close to Central and other commercial districts.

Moving up the property ladder: Buy first or sell first?

For families with kids, parents are more likely to pay a premium for homes located within a good school catchment area or close to international schools. Younger couples are even making this choice even before having children. Don’t hesitate to talk to our agents about the criteria you have to look at to determine the location, size and type of residential property as you compare your investment options.

If you own any other residential property in Hong Kong, you will be liable to pay 15% extra stamp duty for your second property, unless you sell your first property within a certain period after the purchase of the second property. Additionally, this may affect your mortgage application and down payment if you require a mortgage for your second purchase. Please consult with your financial advisor and our agent to find out what works best for you.

Arrange a viewing

Once you’ve shortlisted the properties you’re interested in after talking to our agents, it’s time to book a viewing tour. Our agents are obligated to answer your every question to the best of their knowledge, including concerns over whether there are negative factors that might affect bank valuations.

Make an offer and negotiate on terms

At this point in time, you should have known how much financing you can obtain from a bank (in case you need to). You may also get an initial valuation on the property from the bank to make sure how much you can borrow against the property. You could have your solicitor at the ready too.

It’s time to make an offer. Don’t be frustrated if your first offer isn’t accepted. Our agent as the middleman is here to help both you and the seller achieve the best possible price for both sides.

Sign on the Preliminary Agreement for Sales & Purchase

After the offer has been accepted, it’s time to sign on the preliminary agreement for sales and purchase as an indication of interest. Upon signing you have to pay an initial deposit of 5% of the purchase price. The rest of the deposit, at 10%, will have to be paid upon signing the formal sales and purchase agreement.

Find a solicitor

The process of transferring the legal title of the property to under your name or your company is called conveyancing. In Hong Kong, conveyancing remains a complex legal due diligence process that has to be performed by a solicitor, one on the buy side the other representing the seller, who will make sure that the property’s title is “clean” and is legal to be transferred.

Complete your mortgage application

Now is the time to get back in touch with your financial advisor to work out a suitable mortgage deal for you and complete the mortgage application. In most cases, your mortgage lender will arrange a valuation to confirm that the property is worth what you are being lent.

Sign on the Formal Agreement for Sales & Purchase

After your solicitor has vetted the property’s title and that the sales agreement makes legal sense, it’s time to sign on the dotted line the formal sales and purchase agreement. You will have to pay the outstanding amount of the 10% deposit, along with the stamp duty and solicitor’s fee. You should have negotiated the handover date previously with the seller, usually 1-3 months after signing on the dotted line.

Completion and assignment

The exchange of contracts between your and the seller’s solicitors usually takes place on the handover date. Checked and signed by both you and the seller, your deposit will be sent to the seller’s solicitor, along with the signed contract. You are now legally bound to the purchase. The balance of the purchase price, i.e. 90% will be settled before the completion and transfer of the title deed.

Check our website regularly for your next dream home and start your journey with us now.