Hong Kong Considers Tax on Owners of Empty Flats

Hong Kong’s well known challenges surrounding population growth, housing and property prices could lead to a tax imposed on empty homes being hoarded by developers.

In an online talk show involving Financial Secretary Paul Chan Mo-po revealed that the government was deliberating the idea as one of many different solutions to quell property “hoarding” by developers which leads to a drop-in supply and an almost unaffordable cost of living.

Chan said that 9500 vacant new homes were left unsold at the end of 2017 and the number has increased again in 2018.

Related reading: Investors Warned Over Vacant Residential Property: Sell, Rent or be Taxed

As of September 2017, according to the South China Morning Post, there were 9,000 unsold flats in private developments, of which 31 per cent were in projects completed within the last year, compared with 2,000 unsold flats from projects completed in 2016.

Latest statistics from the Rating and Valuation Department revealed the home price index rising 1.27 per cent to 357.5 in January, hitting a record for 15 consecutive months – the longest stretch of gains since 1993.

Known as the world’s least affordable housing market, Hong Kong has seen residential prices more than double in the past decade as supply fails to keep up with increasing demand.

It has not been specified if the tax would be on homeowners of developers, but analysts are skeptical if the plan will come to pass considering the challenges of imposing it on either group.

Hong Kong would follow Singapore’s lead in imposing a tax on unsold, vacant apartments.