The Hong Kong government announced on February 28, 2024, the complete withdrawal of the "spicy measures" in the property market, which means that there will no longer be any additional stamp duties, buyer's stamp duties, and new residential stamp duties imposed on residential property transactions. This measure aims
to allow the market to operate freely and promote stable development in the property market.
What is spicy measures?
Since 2010, the Hong Kong Special Administrative Region Government has implemented three adjustment measures to address overheating property prices, curb short-term speculative activities, restrain external demand, and reduce investment demand. These measures include:
1. *Special Stamp Duty (SSD): Imposed on transactions where individuals or companies purchase residential properties on or after November 20, 2010, and resell them within two years. The tax rate ranges from 5% to 15% of the resale transaction amount.
2. *Buyer's Stamp Duty (BSD): Applicable to non-local buyers purchasing residential properties, with a tax rate of 15% of the transaction amount.
3. *New Residential Stamp Duty (NRSD): Applicable to individuals or companies purchasing new residential properties, with a tax rate of 15% of the transaction amount.
These measures aim to increase transaction costs and curb the continuous rise in housing prices.
What is loan-to-value ratio now？
Property Value
Residential Properties
Commercial and industrial properties and
standalone car parking spaces
Self-use
Non-self-use or Company held
Applicants who have not borrowed or guaranteed other outstanding mortgage(s) at the time of making a mortgage application
DSR-based lending
HK$30 million or below
70%
60%
70%
Between HK$30 million and HK$35 million
60%-70%
(subject to a loan cap of HK$21 million)
HK$35 million or above
60%
Net worth-based lending
Regardless of value
60%
Applicants who have borrowed or guaranteed other outstanding mortgage(s) at the time of making a mortgage application
DSR-based lending or net worth-based lending
The above applicable LTV caps will be lowered by 10 percentage points.
What is the defination of Self-use？
“Self-use” refers to occupancy by the owners or their immediate family members (which include parents, spouse, children, siblings, grandparents, grandchildren and parentsin-law),
or by an individual majority shareholder or his/her immediate family members if the property is held by a shell company.
What is Stress Test？
For banks and financial institutions, when individuals apply for loans to purchase real estate, they typically undergo a mortgage stress test. This is a test to assess the borrower's ability to repay the loan in adverse circumstances.
The purpose of the mortgage stress test is to determine whether the borrower can still fulfill the repayment obligations of the loan in situations such as rising interest rates or worsening personal financial conditions. This usually involves evaluating factors such as the borrower's income, expenses, debt burden, and simulating different scenarios, such as the repayment stress when interest rates increase.
During the mortgage stress test, banks consider factors such as the borrower's income, employment stability, personal debt levels, and expected interest rates. They compare the borrower's repayment capacity with specific stress scenarios, such as a 2% increase in interest rates or other relevant stress test criteria.
By conducting a mortgage stress test, banks can assess the borrower's repayment capacity and avoid potential risks during the loan process. This helps ensure that borrowers can maintain their repayment ability in the face of potential financial market fluctuations or personal economic difficulties, reducing default risks.
After the removal of spicy measures, the interest rate stress testing requirement for property mortgage lending that assumes a 200-basis-point rise in the mortgage rate has been suspended starting at 28 February 2024
Information provided in this website is for reference only. While every effort is made to ensure accuracy, Moku Property Consultants Limited disclaims any liability for any loss of damage whatoever that may arise whether directly or indirectly as a result of any error, inaccuracy or omission. Please Refer IRD and HKMA for Details.