The Zhitong Finance App learned that the Hong Kong government mentioned earlier that it will introduce a progressive rating system for residential properties. Lin Ling, executive director of CBRE Hong Kong Valuation and Consulting Services, believes that this measure will have an impact on mid-priced to luxury properties, and is expected to have a big impact on developers with more luxury properties.
Earlier, the Financial Secretary of Hong Kong, Chan Mao-po, proposed changing the rate levy rate of the current system to 5% of the rateable value and introducing a three-tier progressive tax rate system. In the future, the rateable value will be levied separately at the three levels of 5%, 8%, and 12%. The target is to take effect in the fourth quarter of the 2024-25 fiscal year (from January 2025). It is estimated that about 42,000 residences will be affected. However, the new system will only affect homes with a rateable rent value of over HK$550,000, accounting for 1.9% of the total.
Lin Ling believes that the new system will put the greatest burden on developers, because developers own many luxury homes, and if they fail to successfully deliver the goods, the disguised rate burden will increase. At the same time, mid-priced properties already need to pay more taxes, so the new policy will also put pressure on the middle class.
However, she said bluntly that since interest rate hikes increase the cost of building supply and will increase the burden on the public, the Hong Kong government should try not to implement these measures in a countercyclical manner, and suggests that after implementation in the first quarter of next year, pay more attention to social voices before considering whether tax rates need to be adjusted.
Furthermore, although the authorities have not introduced a progressive rate system for commercial buildings and commercial properties, she does not rule out that the commercial market will recover in the future, and there is an opportunity to introduce a progressive system for related properties.