HONG KONG (BLOOMBERG) – Hong Kong may consider waiving extra stamp duty on homes for mainland Chinese buyers as a way to shore up the economy and reverse a brain drain, according to a top adviser to Hong Kong’s leader.
“Mainland professionals have been clamouring for the double stamp duty to be waived for them, even before they acquire the right of abode,” Regina Ip, convenor of the government’s advisory Executive Council, told Bloomberg Television on Tuesday (Aug 9). “It is all a raft of measures under consideration and this is certainly something that the government could consider.”
Foreign buyers of residential property need to pay a 30 per cent levy on all purchases under moves introduced in the past decade to cool home prices. Waiving double stamp duty may reduce that level to 15 per cent.
Shares of developers New World Development and Henderson Land Development surged more than 4 per cent on Tuesday after the comments.
“Luxury home sales can be boosted if the government waives double stamp duty for mainland buyers, who are major buyers of luxury homes,” said Patrick Wong, an analyst at Bloomberg Intelligence.
Ms Ip also acknowledged the benefit that would stem from ending hotel quarantine requirements by November, when a global banking summit and a rugby match are is planned.
“It’s a highly desirable goal – we all hope we could make it, but everything has to depend on a scientific approach based on the data, and we have to brace for other eventualities,” Ms Ip said.
The city’s leader, chief executive John Lee, on Monday took a much anticipated step to reduce mandatory hotel quarantine for international travelers, slashing it to three nights from seven. While that move was welcomed by business groups and analysts, it was seen as insufficient given rival financial hubs have already opened their borders.
Hong Kong is battling to regain its status as a global aviation and commerce center after years of strict Covid-19 border controls isolated the former British colony and fueled an exodus of residents. The city’s economy is projected to shrink this year for the third time in four years.