Learn how Asian countries compare on foreign property ownership rules, taxes, visa options, capital controls and more. In general, rural collectives own agricultural land and the state owns urban land. You can find much information about realtors on EAA’s website, they also have plenty of other practical info, like FAQs. Most likely because it is cheaper, but the property is not usually to live in themselves. Although these new regulations relate to urban land, the legal principles established have significant implications for the rule of law in China. [2] In fact, the property rights were not structured during imperial times. But that is not the end of the story, in Hong Kong the government set up a few legislations to make investing in property harder and harder. You should also include information regarding what will happen if any of you break the contract, or if the tenant can renew the tenancy, How much the tenant should pay in rent and the frequency of payments, Landscope Christie’s International Real Estate. The loan conditions differ depending on if your source of income comes from Hong Kong or not. With the passing of the Property Law, a number of local legislators fear that "while the new property law would undoubtedly increase protection for home owners and prevent land seizures, it would also erode China's socialist principles. Agreements and contracts are often written in a juridical way. use rights of rural infrastructural land; expropriated for roads, railways, bridges, etc. This is similar to countries like Bangkok and Cambodia, for example. The BSD is applicable to foreigners, but not to permanent residents (HKPR). Hong Kong can be a good option if you have a decent amount of cash and look for a safe place to invest long-term. When you’ve found a property that you like, checked the title, and agreed on the price with the seller, you need to pay an initial deposit. The BSD has to be paid within 30 days after the execution of the chargeable document. By minimising the business interests in the expropriation procedure, incidents of forced expropriation might be reduced.[33]. However, there are some limitations to foreign ownership, for example, to the ownership of land. To sell a property, local and foreign owners, including Hong Kong residents, are … Thus, it can reduce the risk of coming across pitfalls later. Private forest holdings continued to exist until the collectivization of the countryside. Even if some leases will expire by 2047, there’s an assumption that these leases will be renewable, free of charge. Prices tumbled as much as 70% in some areas but the market finally started to recover after 6 years. Marcus is a Swedish Engineer and previously worked as a Sales Manager within the Automotive industry in Shanghai. Yet, according to the Basic Law, the leasehold agreements can be extended beyond 2047, in case the leases were renewed after 1997. We will probably see a change to this in the future as companies have started to offer online services. The surplus grain above the quota could be sold freely at private markets. The Great Leap Forward (1958–1962) forced the central leadership to decentralize land ownership from the commune to the production team. It can thus be seen that China's property laws have been undergoing developments. Interestingly, the leasehold periods were set to 75, 99, or 999 years, depending on where you bought a property in the past. The market has been hit badly during the COVID-19 pandemic and we’ve seen large-scale layoffs in industries like aviation and banking. When it came to the rental market, the most expensive city was New York, where the average monthly price of rent hit $2,844. After the Chinese Communist Revolution in 1949, most land is owned by collectivities or by the state; the Property Law of the People's Republic of China passed in 2007 codified property rights. In China, there is no unified official procedure for the rules on the registration of land-use rights and the ownership of property. Some expats try to get RMB out of China through Hong Kong. Article 13 of the constitution provided that: "The lawful private property of citizens shall be inviolable. ), use rights of state-owned wasteland (includes mining, military purposes. If you plan to buy real estate in Hong Kong, then it might be the right time. Evidently, the Chinese play a big role in the market as we saw a correction of around 10% during the first quarter of 2019. If you’re from Singapore, you can see that the process is similar as buyers first pay a fee of 1% for a so-called Option to Purchase (OP). You need to live in Hong Kong for at least 7 years to become a permanent resident. He is currently a freelance consultant supporting Asiaimportal (HK) Limited with content creation and research. [51] However, in 2011, the Chinese Government released regulations clarifying this, which promise to provide more transparency and a fairer compensation system. “I recently spoke to two foreign funds who said they would not consider Hong Kong at this time because the political risks are relatively high now,” said Daniel Wong, CEO of Midland IC&I. Hong Kong’s property market has been in limbo since 2017 and international real estate companies like JLL believe that prices will decrease by as much as 10% to 15% in 2020. It’s not the performer in terms of rental yields whatsoever, but there are other countries that might be more suitable if that’s your preference. It might cost you some extra money in the short term, but it can save you a lot of money in the long term. If you buy a property as an investor, which means that you rent it out, the LTV will be reduced to 40%. Let’s have a look at the taxes you need to pay when buying, holding, or selling real estate in Hong Kong. Give the banks a call and get detailed up-to-date information regarding: Keep in mind, you need to go to Hong Kong and book a meeting with a local branch in order to get a loan. Foreigners cannot be landlords. With that said, agents will most likely be reluctant to reduce the rate if you bring the discussion to the table. [11] There are several types of usufructuary rights. This trend has strengthened since the British government started to offering citizenships to holders of British National (Overseas) passports in May. [16] The ownership of the buildings will change together with the land. Middle and rich peasants were allowed to keep part of their land holdings, whereas expropriated landlords were allocated sufficient land to make a living. Usually, your lawyer or agent will communicate with your bank to make sure that the money is transferred from your account to the seller’s account. The real estate market has been hit hard in Hong Kong during the COVID-19 pandemic. If you buy property in places like Japan or Korea, it’s virtually impossible to apply for a local property loan, unless you’re a permanent resident or have a Japanese spouse. Be sure to discuss with a local branch directly as regulations change over time and to get all relevant details. [4]:6, China's Land Reform (1950-1952) was one of the largest examples of land expropriation in world history. [3] During the Qing Dynasty (1644-1911) some titling of land ownership did take place, albeit not systematically or at a national level, and historical titles have been handed down to the present. When you’ve found an agent, you should assure that he or she has a reputable track record and is well-versed in English, Cantonese, or Mandarin, depending on your needs. The unification of interests in a single registry is still not prevalent in the smaller cities and will take more time before its implementation.[29]. [12] This right is transferable, but the land use rights based on agricultural household contracts cannot be changed arbitrarily for non-agricultural purposes. The most recent development would be the enactment of the Property Law in March 2007 (after 14 years of debates), which is noted as one of the most important core components of the evolving civil law in the PRC. I also recommend you to search for the agent in the EAA’s (Estate Agents Authority) registry. Some argue that the imperial state had limited control over landed property, whereas others hold the view that imperial China acted as an all-controlling state. Hong Kong buyers have climbed a notch to become the fifth largest foreign investors in central London in the past 12 months, Knight Frank data showed, after China, the United States, India and Russia. The COVID-19 pandemic had a great impact on the market as well and some analysts believe that luxury homes will see price reductions of 10%. [4]:5–6, There were several times of changes in ownership and control over land in China. The issue by going for this option is that foreigners cannot own more than 49% of a limited company in Thailand, except for US-citizens. [29] The Property Law only offers a general guideline as to recordation. In addition to the AVD, the government has introduced a Buyer’s Stamp Duty (BSD). There are two kinds of property titles: Use Rights - lease rights to the property. In the past, both locals and mainland Chinese found ways to avoid paying the hefty stamp duties, as it was charged to permanent residents that were second-time home buyers. In case you need financing, there are plenty of banks that are willing to help you. You can search for the title in the land register online but should review the title with the help of your realtor and a lawyer. Given the significant affordability of property in the UK compared with Hong Kong, some BNOs may even consider buying multiple properties; one for personal use and one for investment. Real property rights in China can generally be grouped into three types. The government even plans to build an artificial island to counter the problem, a project that will cost as much as USD 80 billion. As part of an agreement signed at the time, it enjoys some freedoms not seen in mainland China - and these are set … The tenancy agreement will show the rights and restrictions your tenant has when leasing your property. However, different interests might be registered under different registries. You need to pay three different deposits, as follows: The Initial Deposit is paid before the Provisional Agreement (PA) is signed and the rate varies between 3% – 5% of the purchase value. With that said, some believe that the Hong Kong market might see a similar upswing as after the Sars period. An investor who wants to invest or develop land or property in China must bear in mind China's property laws, most notably the property law introduced in 2007,[7] which for the first time protects the interest of private investors to the same extent as that of national interests.[8]. It is almost impossible for a foreigner to get a mortgage without a Taiwanese co-signee/guarantor, and even then it can be hard. Each case is treated individually and you need to keep your records for at least 7 years after the completion of the sale. [1] Landlords paid taxes to the government in return for land-owning rights (known as subsoil rights), but did not have the right to actively use the land. BEIJING (AP) — China lashed out at the U.S. on Tuesday over new American sanctions against Chinese officials for their actions in Hong Kong, along with the sale of more U.S. military equipment to Taiwan, moves touching on two of the most sensitive issues in the increasingly contentious relationship between the nations. The agreement should be reviewed and signed by both yourself and the seller. [17] As a protection of the right, the term of the right shall be automatically renewed upon expiration[18] If it has to be taken back, compensation shall be given. Forms of security rights include mortgages, pledges and liens. Once the farmers and collective land owners are notified, the expropriation can commence. Before finalizing the payment of your property, you need to confirm the final mortgage amount that you can borrow from the bank. There’s a reason why it has one of the world’s most expensive and most overvalued real estate markets. In this way, he could avoid paying taxes worth around USD 17,000,000. Hong Kong is one of the most expensive cities when it comes to housing prices. A land user obtains only the land use right, not the land or any resources in or below the land. How difficult is the property purchase process in Hong Kong? Time is also money, so taking a flight to Hong Kong from Shanghai, Shenyang or Beijing to get money out of China, doesn’t make any sense. Hong Kong has grown from a small trading hub to become one of the top three financial centers in the world. This results in a hefty stamp duty of 30%. Don’t take for granted that all of the above-mentioned banks offer mortgages for nonresidents, especially if your income comes from abroad. However, some of the methods used to do so aren’t cost effective. [44] Peter Ho has demonstrated that one of the unresolved issues is the level of collective ownership. This is common in Asian countries and regions, including mainland China, Indonesia, Vietnam, Cambodia, and Thailand. In effect, this means that – at least for employment purposes – residents from these three regions will be treated the same as local mainland Chinese residents. Land owned by the state was seen as "absolute" and therefore, did not warrant a title; a principle adhered to – and enshrined in regulation – until today. I’ve personally been in touch with some banks to confirm if it’s even possible to get a local property loan as a non-resident foreigner. The total rate for the Initial Deposit and Further Deposit is 10% of the total price. Firstly, you should know what financing options you have. Keep in mind that rates charged by agents are negotiable as these are not set by laws. You usually need to pay a commission of 1% to the realtor. Also, there’s a cap set to HKD 4,000,000. Foreigners, including Hong Kong and Macau residents, are limited to buying one residential property for self-occupation only. – Rent that is not recoverable Friday China links. Even if prices reach record high levels, Hong Kong continues to be an attractive spot for overseas investors. Once you have Bitcoin , you can trade it for altcoins on crypto-only exchanges such as Binance . Still, the government has introduced new regulations as late as 2018, something that can determine whether Hong Kong is a no-go for you. [38], The Land Administrative Law provides five situations under which land use rights may be withdrawn:[39], The rights holder is entitled to "appropriate compensation" in the first two situations. [6] The 1982 constitution provided for the "socialist public ownership" of the means of production, which takes two forms- state ownership and collective ownership. Before you commit to any purchase, it’s important that understand the different steps involved in the buying process. In case you buy and sell property with a profit-seeking incentive, you might need to pay a capital gains tax. Yet, your source of income should preferably be in Hong Kong and the maximum amount available is capped at HKD 3 – 4 million and LTV ratios of 40-50%. The local government or non-profit organisations are now in charge of land expropriation and compensation. In the 1930s Land Reform in the old revolutionary base areas, such as the Jiangxi Soviet and the Shaan-Gan-Ning Border Region, was carried out with the least possible social disruption. – 20% as allowance for maintenance, + HKD 96,000 * 15% = HKD 14,400 The first type is ownership rights. Banks don’t pay much attention to your nationality or residency status. The extradition crisis and some of the highest property prices in the world are behind a rise in applications by Hong Kong residents to emigrate to countries such as Canada and Australia. Foreigners and mainlanders don’t have any particular issues to buy real estate. We saw a price peak in August 2018 and the demand from Chinese buyers has loomed due to the current trade war and tightened capital controls in the mainland. How can a Hong Kong resident or foreigner dispose of a property in mainland China? Cushman & Wakefield, on the other hand, believes that prices might drop as much as 20%. [48], Another issue is the problem of rampant corruption arising from rural land transactions, involving both governmental and non-governmental parties. It was not until a speech by Mao in 1948 that a moderate stance was taken once more. Required fields are marked *. Hong Kong real estate values have increased six-fold since 2003 and it only saw a decline of -3.6% in 2016. The Land Registry records documents related to ownership of land on behalf of the owner. The BSD is charged at a flat rate of 15% and needs to be added on top of the Ad valorem duty. According to HSBC, non-resident foreigners can get mortgages of up to 50% of the total property value if you reside in the property. Since all land is owned either collectively or by the state,[32] expropriation of rural land only requires the withdrawal of land use rights for the reason of "public interest. [23] This is to ensure obligations are met. Suggestion: Watch the 5 minutes video tutorial before reading this article, Do you plan to buy property in Hong Kong S.A.R.? According to a report released by CBRE, houses now average at more than USD 1.2 million, resulting in locals that struggle to buy new homes. More and more locals complain that the commissions are too high, as realtors can secure great commissions from a comparably “small” amount of work. However, you need to include information, such as: Be sure to print three copies of the estate agency agreement and the formal tenancy agreement: One for you, one for the tenant, and one for the real estate agent. [45], While the Property Law enacted in 2007 provides some legal leverage to prevent the abuse of power by village councils, it remains to be seen if legal remedies are accessible or are even used by the villagers. The owner of a usufructuary right has the right to possess, utilize and obtain profits from the real properties owned by others. Do I need an HSBC account to get a mortgage or invest in a property overseas? On August 3, 2018, the State Council announced that residents of Taiwan, Hong Kong, and Macau (‘THKM’) will no longer require work permits to work in mainland China. [19], The owner of the right to use of residential housing land can possess and utilize such land as collectively owned, and can build residential houses and their accessory facilities. Foreigners and locals cannot own land on a freehold basis in Hong Kong. The first deposit is called ”the Initial deposit” and usually 5% of the purchase price. [47], While critics may be skeptical of whether the new enactments clarifying the issue of collective ownership will make a difference, such changes are still welcomed as signs of increasing protection for the rural villagers. In 2004, it amended its 1982 Constitution to include that the Government has to pay the person compensation for expropriation (征收) or requisition (征用). The introduction of tighter lending policies and an increased Buyer’s Stamp Duty (BSD) in April 2018 had some effect, as prices started to fall during the second half of the year. Cushman & Wakefield, on the other hand, predicts drops of up to 20%. Some of the items the IRD will take into consideration are: A seller’s stamp duty (SSD) is charged with a rate that decreases progressively, depending on your holding period. Chinese property law has existed in various forms for centuries. Foreigners who have studied or worked in China for a minimum of one year are permitted to buy property. Read hundreds of articles and expert interviews covering Asia property taxes, foreign ownership rules, projects & much more. Land use rights can be obtained from the land administration department by agreement, tender or auction. These include interests such as defence, transportation infrastructure, education and health. In the process, between 200–240 million acres of arable land were redistributed to approximately 75 million peasant families. There is a big twist on it though. However, you’re able to make deductions for maintenance first, if those are considered relevant. The Home Office appears to have dramatically widened the pool of Hong Kong citizens that will be eligible to apply for UK citizenship, implying millions may be able to apply if China … It’s been the prime spot for companies and individuals to allocate cash as it’s considered a safe haven with one of the most liberal economies in the world. [25], The land grant contract must be signed. Disclaimer: We don’t offer any kind of insurance or compensation, due to losses caused by the agency, developer, banks, government or any other party that may be involved in the buying process. Thereafter rural private land ownership was effectively abolished through Land Reform, which left land in the hands of the state or the collective. During such times, there were frequent shifts in ownership as abandoned land was reclaimed after former owners had fled or died. This register is proof of ownership. Foreigners and mainland Chinese investors generally don’t have any issues to buy real estate in Hong Kong. After they had gained power, the CCP gradually worked towards the abolition of private ownership. This makes Chinese real estate a depreciating asset. Some of the agents I’ve found during my research and that you should consider contacting include: You can also find smaller foreign owned estate agents on places like Lantau Island, for example, HomeSolutions. Some of the information that should be included in the PA is: You can visit EAA’s website to review a complete list of all the items that the PA should include. Free Hold - has ownership rights to the property. Disputes regarding the compensation and resettlement shall not affect the implementation of the expropriation. Non-resident foreigners, on the other hand, must pay down payments of around 40% to 50%. 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