Vacant property rates tabled

June 29, 2018

Voiceover: 
The Government is concerned about the rising number of unsold first-hand private residential units in completed projects in recent years. The number has grown from about 4,000 units in March 2013 to 9,000 in March this year.

Chief Executive Carrie Lam proposed introducing Special Rates on vacant first-hand private flats by amending the Rating Ordinance.

Owners of these units with an Occupation Permit issued for 12 months or more will be required to furnish annual returns to the Government on the occupancy status of the flats. Units that have not been occupied or rented out for more than half of the last 12 months will be considered vacant and subject to Special Rates.

The rates will be collected by the Rating & Valuation Department annually at 200% of the rateable value of the units concerned, which is roughly equal to 5% of the property value based on the average rental yield of 2.5% for residential property in March this year.

Financial Secretary Paul Chan said the Special Rates are adequate for the moment.

Financial Secretary Paul Chan:
At the moment it is set at 200% of rateable value which can be translated into about 5% of the property price. We consider this an adequate measure but we keep an open mind as this bill will go through the Legislative Council. But at this stage, we do think 5% of the property price in the form of an additional rate is appropriate.

Voiceover:
The Government plans to table an Amendment Bill at the Legislative Council during the 2018-19 legislative year to amend the Rating Ordinance. The Special Rates will take effect after the gazettal of the Amendment Ordinance following the passage of the Amendment Bill in LegCo.

To improve market transparency and enhance consumer protection, Mrs Lam also announced the Government will amend the Consent Scheme to improve sales practices by requiring developers to offer for sale at least 20% of the total number of residential units subject to the pre-sale consent at each turn of sale, regardless of the sales method.

If the remaining unsold residential units are less than 20% the developer must offer for sale all remaining flats in one go.

This 20% requirement will take immediate effect upon announcement.

The Government has proposed introducing Special Rates on vacant first-hand private residential units at two times the rateable value of the flats to encourage developers to expedite the supply of first-hand homes.

Announcing a package of six new housing initiatives today, Chief Executive Carrie Lam proposed the Special Rates as the number of unsold first-hand residential units in completed projects has grown from 4,000 units in March 2013 to 9,000 in March this year.

She said the increase is undesirable in face of a severe housing shortage and said more effective measures are required to expedite the supply of first-hand private flats.

The Rating Ordinance will be amended to require owners, mainly developers, of first-hand private residential units with the Occupation Permit issued for 12 months or more to furnish annual returns to the Government on the occupancy status of the units.

Units that have not been occupied or rented out for more than half of the past 12 months will be considered vacant and subject to the Special Rates.

They will be collected by the Rating & Valuation Department annually at 200% of the rateable value of the units, which is roughly equal to 5% of the property value based on the average rental yield of 2.5% for residential property in March this year.

Financial Secretary Paul Chan said the Special Rates are adequate for the moment.

"We consider this an adequate measure but we keep an open mind as this bill will go through the Legislative Council. But at this stage, we do think 5% of the property price in the form of an additional rate is appropriate."

The Government plans to introduce an amendment bill at the Legislative Council next legislative year. The rates will take effect after gazettal of the amendment ordinance following passage of the bill.

Meanwhile, the Consent Scheme will also be amended to require developers to offer for sale at least 20% of the total number of residential units subject to the pre-sale consent at each turn of sale, regardless of the sales method.

The developer must offer for sale all remaining units in one go if the remaining unsold flats are less than 20%.

Mrs Lam said the 20% requirement will improve market transparency and enhance consumer protection.

It will take immediate effect and will apply to new pre-sale consent applications and applications being processed by the Lands Department under the Consent Scheme.