Property & Conveyancing

Purchasing a property commences with execution of a provisional or formal agreement for sale and purchase of the property by the parties, followed with title investigation by the purchaser’s solicitors via perusing title deeds of the property and raising requisitions on title, vendor’s solicitors will then answer or resolve those requisitions. Once title investigation is completed and satisfied, parties may proceed to completion of the transaction by executing assignment and other documents ancillary thereto. The purchaser will become the legal owner of the property and obtain a direct ownership and control over the property.

For purchasing shares of a company that owns the property, the purchaser becomes a shareholder in that company rather than the direct owner of the property. The purchaser acquires not only the company shares and the company’s assets but also the company’s liabilities (if any). Apart from investigating the title of the property, the purchaser will conduct a thorough due diligence exercise on the company. Professionals, apart from real estate agents and lawyers, financial experts or tax experts would also be engaged to verify the accounts and the overall financial health of the company.

The current stamp duty for transferring shares chargeable on the bought and sold notes is 0.2% of the higher of consideration and net asset value of the shares which is of much lower percentage rate than that for the direct purchase of a Hong Kong property.

1. Joint tenancy

Each co-owner is simultaneously entitled to possession of the whole property. No joint tenant is entitled to exclusive possession of any specific part of the property.

As all the joint tenants together are deemed to constitute one sole owner, the right of survivorship operates between them. When one joint tenant dies, the deceased joint tenant’s interest will automatically pass to the surviving joint tenant(s) who will own the whole property.

2. Tenancy-in-common

For tenancy-in-common, each tenant-in-common is regarded as having a distinct “undivided share” in the property. Each tenant-in-common’s interest is usually in proportion to his/her contributions made to the purchase price of the property. The right of survivorship does not apply to a tenancy-in-common. On the death of a tenant-in-common, the deceased’s share will pass under his will or by the rules of intestacy. A tenant-in- common can sell his share of the property. No consent or agreement of other tenants-in-common is required.

Rule 5C (1) of the Hong Kong Solicitors’ Practice Rules (Cap.159H) provides that the vendor and the purchaser are required to be separately represented by solicitors.

Nevertheless, provided no conflicts of interest or significant risks of such conflict arise, joint representation is permitted in the following circumstances:-

(a) sale and purchase of units or other interests in uncompleted developments which are subject to the Consent Scheme;

(b) sale and purchase of units or other interests in uncompleted developments to which the Non-Consent Scheme provisions apply;

(c) first-hand sale of units or other interests in completed developments;

(d) sub-sale of units or other interests in the above sub-paragraphs (a), (b) or (c);

(e) parties are associated parties;

(f) consideration for the land does not exceed HK$1,000,000;

(g) mortgage of land; and

(h) leases of land.

Before 2024

Three key stamp duties applied to Hong Kong property transactions:

(1) Ad Valorem Stamp Duty (AVD) – A progressive tax charged on the higher of the purchase price or market value of the property. Higher rates applied mainly to residential properties acquired by non-permanent residents, companies, or buyers who already owned residential property.

(2) Buyer’s Stamp Duty (BSD) – An additional levy imposed mainly on non-Hong Kong permanent residents and companies buying residential property. It was payable on top of AVD.

(3) Special Stamp Duty (SSD) – A tax charged on vendors who resold residential property within a short holding period (generally up to 2–3 years).

Key changes under the current (post-2024 / 2026)policy

28 February 2024 – Full cancellation of the “spicy measures”

• SSD was set to 0% — vendors can now resell residential property at any time without penalty.
• BSD was set to 0% — non-permanent residents and companies no longer pay the extra levy.
• The higher AVD rates under Part 1 of Scale 1 (previously 7.5% or 15%) were aligned with the lower Scale 2 rates.

As a result, every purchaser (local or non-local, first-time or existing owner, individual or company) now pays the same progressive AVD rates.

26 February 2025 – Adjustment of the lowest band

The threshold for the flat HK$100 AVD was raised from HK$3 million to HK$4 million. This reduced the stamp-duty cost for purchasers of lower-value properties.

26 February 2026 – New top rate for high-value residential property

A new higher rate of 6.5% was introduced for residential properties with consideration or market value exceeding HK$100 million (with a short marginal-relief band between roughly HK$100 million and HK$109.57 million).

Non-residential properties were placed under a separate Scale 3, which retains the previous progressive structure but caps at 4.25% (with no 6.5% band).

Current position

All these changes mean that, today, the only stamp duty normally payable on property transactions is Ad Valorem Stamp Duty (AVD) at the progressive rates described above. The system is now far simpler than it was before 2024.

The common part(s) building orders may affect the property title of individual premises. According to Hu Mei Yu Anastasia v King Best Enterprise Ltd (2000) HCA 9317/1998, building order served under Section 27A of Buildings Ordinance (Cap.123) requiring investigation and repair of slope is encumbrance on property. Furthermore, Lam Mee Hing v Chiang Shu Yin (1995) 3 HKC 247 provides that notice relates to the common parts of a multi-storey building may affect the title of all the flats in the block, provided the extent of the repairing obligation is beyond the reasonable expectation of a purchaser then it would constitute an encumbrance on the property unless discharged.

Generally speaking, the property documents should be notarized and depending on which foreign country it is, they may be required to be apostilled by the appropriate authority in that foreign country, or authenticated by the Ministry of Foreign Affairs in that foreign country; and may even be required to be legalised by the Embassy or Consulate General of the People’s Republic of China located in that foreign country.

It is possible to appoint someone to handle property transactions on one’s behalf by way of granting a Power of Attorney (“POA”) to the appointee. A POA is a legal document executed as a deed that allows a person (the Donor) to appoint one or more persons (the Attorney or Attorneys) to act on the Donor’s behalf. A POA can be a general one or specific one. A POA becomes invalid upon the Donor’s revocation, Donor’s death or if the Donor loses mental capacity.

It is prudent to check with the relevant party if the POA to be given will suit the circumstances and be applicable. For example, the financier in the mortgage loan may not accept the POA for signing the loan documents.

Generally, there is no restriction on foreign ownership of Hong Kong properties. However, for certain special housing projects under the “Hong Kong Property for Hong Kong People” measure, the ownership of residential units is restricted to Hong Kong permanent residents only. Otherwise, foreigners/foreign companies/entities (collectively “foreign purchaser”) will have the same rights and obligations (including the payment of management fees, government rents and rates etc.) as Hong Kong owners in owning properties in Hong Kong.

Intended foreign purchaser is advised to consult with his local authorities for any restriction or tax implication in owning properties in Hong Kong.

For any domestic tenancy or sub-tenancy, the landlord has to submit a Form CR109 (Notice of New Letting or Renewal Agreement) to the Commissioner of the Rating and Valuation Department (the “Commissioner”) for endorsement within 1 month from the date on which the parties have entered into a new residential tenancy agreement or renewal agreement. Any late submission of Form CR109 would incur a late submission charge.

Under Section 119L(2) of the Landlord and Tenant (Consolidation) Ordinance (Cap.7), if Form CR109 is not filed or not endorsed by the Commissioner, the landlord (subject to Section 51A(6) of the said Ordinance) shall not be entitled to maintain an action to recover the rent under the relevant tenancy agreement. However, it only prevents recovery of rent and not damages, such as loss of rent.

Unless a landlord expressly permits the outstanding rent to be set-off against the security deposit, a tenant should not presume the option of set-off any payments against the security deposit. The intention to set-off should be communicated to the landlord and seek the landlord’s approval before doing so.

Security deposit is not merely a security for due payment of rents. It is a deposit to secure the due performance of all terms and provisions of the tenancy. Accordingly, in case of breach by the tenant, the forfeited deposit serves to cover unpaid rent or mesne profits until delivery of vacant possession, loss of rent if the premises have been left vacant for some time and the diminution in rent if the new tenancy attracts a lower rental. It represents the parties’ pre-estimate of the landlord’s damages in case of the tenant’s breach.

In addition, tenant should also be aware of any forfeiture clause in the tenancy agreement which allows a landlord to forfeit the deposit for breaches by the tenant (i.e. non-payment of rent). And if the tenancy agreement does not require a landlord to give credit for the deposit in respect of damages, the landlord is allowed to forfeit the deposit absolutely even it is on top of the damages claimed.