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RESIDENTIAL PROPERTY | Staff Reporter, Hong Kong
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Stamp duty rebate extension fails to accelerate home upgrades

There was no significant increase in such transactions from 659 cases to 663 in February to April.

The extension of the stamp duty rebate window from six to twelve months has not been eagerly embraced by Hong Kongers as a way to move up the property ladder, according to real estate consultant JLL.

Also read: Stamp duty rebate extension opens residential sales market to more players

The monthly average of home transactions involving 15% stamp duty, as a proxy for upgrading cases, clocked in at 663 between February and April 2018 which was largely similar to the monthly average of 659 cases recorded between December 2016 and January 2018 when the stamp duty extension was not yet implemented.

“Unless the Government further facilitates the ease of upgrading such as by using phased payments of the stamp duty, the broken chain in upward mobility of homeowners limits the number of flats released onto the secondary market,” said JLL associate director of research Ingrid Cheh.

Also read: Is it high time to waive stamp duty for first-time home buyers?

The government extended the time limit for home upgraders to claim a stamp duty rebate upon disposal of original property last January so that home-upgraders can enjoy a six-month leeway to sell their existing properties whilst remaining eligible to a stamp duty rebate.

However, in the two years leading up the stamp duty announcement, the number of home transactions involving Double Stamp Duty payments hit an average of 1,454 per month which represents more than double the current level of upgrading activity being recorded in recent months. “From this, it can be seen that the hefty 15% stamp duty payable at the onset had effectively put a break on upgrading activity in the market,” added JLL.

Transaction volumes in the secondary market are expected to remain subdued unless the government does away with the stamp duty upfront altogether, JLL said in an earlier report, as developers are likely to receive the boost from the amendment and not home buyers. 

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