ince the government implemented “spicy” measures to increase stamp duty to 15% last October, there biggest change in the market has been that people who do not have any property under their names are eager to purchase homes. My colleagues informed me that what bothers home buyers these days is not what to buy, but what name to use when making the purchase, as the difference can mean a huge amount of tax money! In the past, it was a norm for couples to co-own their home. The popular way to do it now, however, is to transfer the proprietorship of their home to one person, so that the other person, who has no property under his/her name, can buy another property with the old stamp duty rate.
Since buyers can only enjoy the lower stamp duty rate on their first purchase, to maximize the first-time buyer benefit, some buyers would take advantage of a loophole in the policy and make several purchases at once, which means that they put multiple housing units into one single contract.
It has become a ubiquitous phenomenon in the primary market. Naturally, developers are in favor of such practice, even giving those buying multiple units priority to choose make their picks before everyone else. In the past five months, there have been 421 “One Buyer, Multiple Units” contracts amongst the 28 major new housing estates in Hong Kong. These transactions reached a combined sum of HK$17 billion, taking up 25% of first hand property market sales.
This loophole is obviously unfair to buyers only purchasing one unit, who have to wait for their turn to pick the unit after multiple-unit buyers. It not only puts them in great disadvantage against wealthy speculators, but also cultivates class resentment and can be detrimental to the entire society.
In addition, multiple-unit buyers are more inclined to purchase several small units, which further facilitates sales flow into the small unite market, leaving genuine home-buyers with tight budgets with even fewer options and opportunities.
The “One Buyer, Multiple Units” phenomenon is exclusive to the primary market, which inevitably gives people the impression that the biggest winners of this unfair game are real estate developers. Some critics even say that the fact that the government is not fixing this obvious policy loophole means they are either incompetent or purposely doing so for their own gains. If the administration doesn’t take immediate action to put an end to such practice, not only will it perpetuate this unfair competition, but will also damage the reputation and credibility of the government.