The New Territories has an abundance of village houses, which, thanks to the development of new towns and the improved local transport network, have become increasingly popular among buyers.
In the past, buying a village house was simple—the only high risk to watch out for was unfinished projects, as disputes could arise if the house didn’t end up being completed, or didn’t have road access. In fact, a village house can only be sold when construction is completed and the land premium is paid. Therefore, by definition, selling and buying unfinished village houses is prohibited. Thankfully, such cases are very rare due to stringent control and regulations by the government.
Theoretically, there is no problem in buying and selling finished village houses. However, in April 2017, the government introduced measures to suppress property transactions described as “one contract, multiple units,” meaning more than one housing unit is being sold within a single contract. If a standalone or duplex village house contains more than one unit, the buyer may have to pay a stamp duty of 15%, unless said property has never had sub-deeds.
Generally speaking, village houses built in or after 1987 are managed under a rather well-developed regulatory system. Before the construction, the owner has to apply for three government waivers; once the finished house is deemed compliant with specifications, it will receive a Certificate of Compliance. After the land premium is paid, the house can be sold freely, and banks will provide mortgage. So, the easiest way for buyers to check on a village house is to go to the Land Registry and see if the house has a Certificate of Compliance and if there has been a bank providing a mortgage on it. The results of your search can serve as a very good reference point.
On the other hand, pre-1987 village houses may not come with a Certificate of Compliance or any waivers, but the Lands Department would usually issue a “no objection letter” for compliant houses, which can be treated as a certificate.
People typically buy village houses as their homes, but one can apply for the ground floor space to be used as a shop. It’s worth noting that for some old houses, the land deed doesn’t specify any restrictions on usage. In such cases, it’s highly advisable to consult experts or lawyers on the details.
Despite the many issues to handle and traps to avoid, village houses possess a unique appeal in the housing market as they boast scenic surroundings, easy parking and relatively affordable prices. When buying a village house, make sure to find an experienced and reliable agent and seek assistance from experts. I recommend avoiding direct communication or negotiation with the owner to avert potential risks and mistakes.