HK Scraps Double Stamp Duty On Commercial Property

The government is scrapping the double stamp duty on commercial property, citing liquidity difficulties for enterprises because of the city's recession.

In her Policy Address on Wednesday, Chief Executive Carrie Lam said the administration is heeding calls from lawmakers to abolish the Doubled Ad Valorem Stamp Duty (DSD) on non-residential property transactions.

The duty, introduced in 2013, was aimed at tackling speculative behaviour in the market. But with a drop in demand for non-residential property as the economy struggles during the pandemic, Lam said she feels it is the right time to remove it.

The CE said to allow property owners to benefit as soon as possible, the double stamp duty will be lifted from Thursday, adding that the Executive Council approved the move on Wednesday morning.

But the CE stressed that she has no plans to change stamp duty rates for residential properties "given the tight housing supply and that residential property prices remain beyond the reach of the average households".

There was a lukewarm response to the move from analysts, with real estate agency Colliers International saying it wouldn’t be able to significantly boost demand for commercial property as the market for retail and office buildings has been soft.

Hannah Jeong, head of valuation and advisory services at the company, told RTHK's Candice Wong that transaction volumes may rise a bit – but the impact would be limited, and won’t help boost the sector or drive prices up.

"This percentage, around 8 percent reduction, is not really attractive to the investors because when people want to buy the office or retail shop for investment purpose, they will look at what kind of return they can get... but the rental market is very, very soft at the moment," she said.

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