Foreign nationals wishing to buy a property in Hong Kong have to comply with certain conditions. Here is an overview of related procedures.
Hong Kong's real estate market is one of the most expensive markets worldwide. According to the firm Demographia International, the average cost of a property in Hong Kong can reach up to 17 times an individual's average income. This is particularly due to the boom the real estate market has been experiencing since 2010. But expatriates are keener about investing in a real estate property despite rising prices all year round.
In general, prices vary from one neighborhood to another. Hence, you will need an average of HKD 25,000 per square meter for a small apartment. For a large apartment on the other hand, for instance a 160 m² one, you will need thrice as much.
All the land present in Hong Kong is the government's property. Therefore, when buying a property, you will rather be buying a building than the land on which it is located. Hence, you will in fact be eligible to a long-term lease rather than a property title. The long-term lease period can range between 75 and 999 years. Prices also tend to vary according to the duration. Therefore, you are required to pay a land rent to the government on buying a building.
The whole land purchase procedure has to be notified to the Land Registry beforehand. You will then proceed as follows:
Signing a provisional agreement
The buyer and the seller have to sign a provisional agreement established by the broker or real estate agency. In the case of a major investment, your real estate lawyer has to evaluate the value of the property before drafting a formal agreement without passing through the provisional agreement step. You also have to make a deposit ranging between 3% and 5% of the property's total value.
Meeting with the lawyers
Both the buyer and the seller have to hire a specialized lawyer to assist them with related procedures. They will be responsible of negotiating the formal agreement in accordance with the provisional agreement. They also have to take into account any particular situation regarding the real estate transaction.
You will have to make a second installment on a subsequent date according to the conditions mentioned in the provisional agreement. This installment, however, should be paid either before or on signing the formal agreement.
Finalizing the formal agreement
The formal agreement has to be signed at your lawyer's cabinet. The second installment, therefore, which will amount to 5% to 7% of the property's total value, depending on the first installment paid, will normally account for a total of 10% of the property's value. You are also required to pay a tax stamp.
Thereafter, the formal agreement will be transferred to the seller's lawyer. The second installment then has to be paid to the seller, unless it has to be kept by the lawyer. Once all documents have been signed, the seller's lawyer will send a copy of the formal agreement to your lawyer. The latter will then take care of paying the tax stamp and register the deal at the Land Registry. Finally, both parties' lawyers will have to transfer the property title.
You are advised to conduct an inventory on the spot before finalizing the deal. You are then required to inform your lawyer whether you are satisfied on the transaction date. You lawyer will then finalize remaining administrative formalities (bank, transferring documents to the seller's lawyer, etc) before the deadline mentioned in the formal agreement.
Access to the building
Once the full payment has been made (selling price), the seller's lawyer will give the property's keys to your lawyer. Note that other formalities have to be filled in by both lawyers before you can occupy the property.
Find a property
It is recommended that you seek the help of a broker or real estate agency when looking for a property to buy. Note that property prices are likely to vary according to several factors, namely the place and neighborhood, the environment (noisy, residential, etc.) as well as the property's antiquity, etc. Most of the affordable properties are found in the New Territories, although prices are considerably high almost everywhere.
Expat.com – Housing in Hong Kong
Land Registry www.landsd.gov.hk
Land Registry – Payment of property tax www.landsd.gov.hk
Square Foot www.squarefoot.com.hk
Hong Kong Homes www.hongkonghomes.com