​A Comprehensive Guide to Buying a Residential Property in Hong Kong: Procedures, Steps, and Expert Tips

1. Research and Preparation

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Define Your Needs and Budget

• Clearly outline your property requirements, including type, location, size, amenities, and budget constraints, to align your search with your specific needs.

 

Conduct Market Analysis

• Perform a comprehensive analysis of the real estate market, including property prices, market trends, and the availability of properties in your desired locations, to make informed decisions.

 

Seek Professional Advice

• Engage with a diverse range of experts such as estate agents, legal advisors, financial consultants, and mortgage specialists to gain valuable insights and expert advice tailored to your individual circumstances.

 

Expert Tip

• Collaborating with an experienced estate agent who prioritises your interests can significantly streamline the property acquisition process and ensure that you make well-informed decisions throughout your property search and purchase journey.

 

 

2. Property Search and Selection

 

Utilise Online Platforms

• Explore a variety of online listings on platforms like Spacious, Squarefoot, House360, and 28Hse to discover properties that align with your criteria and preferences. 

 

• You can also ask your estate agent to conduct a search for you.

 

View Properties

• Shortlist potential properties based on your research and conduct on-site visits to evaluate their locations, conditions, and proximity to essential amenities.

 

Compare Properties

• Conduct a thorough comparison of the shortlisted properties, weighing the pros and cons of each against your requirements and budget to make an informed decision.

 

Expert Tips

• Prior to signing a Provisional (or Preliminary) Agreement for Sale and Purchase (PASP), consider obtaining a mortgage pre-approval from your bank. This pre-approval can provide you with a loan offer in advance, offering peace of mind and streamlining the purchasing process. After submitting the required documents to the bank, you will receive a reply in around 15 working days.

 

• Additionally, be aware that certain stigmatised properties, such as those associated with homicide or suicide events (the so-called “haunted houses”), may face challenges in securing mortgage loans due to bank restrictions. It’s advisable to research and understand any property-related issues that could impact your financing options.

 

Useful Tool

• Refer to HSBC’s guide on the Home Purchase and Mortgage Process to gain valuable insights and information on navigating the mortgage application and property acquisition journey effectively.

 

 

3. Negotiation

 

Engage in Discussions

• Initiate negotiations with the vendor (the owner who is selling the property) or their representative, engaging in discussions regarding the price and terms of the sale of the property. Knowing the vendor’s position and your own is the key to a successful deal.

 

Submit a Formal Offer

• Present a well-defined written offer to the vendor, outlining key details such as the proposed purchase price, initial and further deposits, anticipated completion date, and any additional terms crucial to the transaction.

 

• Your estate agent can provide valuable guidance and negotiate on your behalf.

 

Wait for a Response

• Following the offer submission, await the vendor's reply, which may involve acceptance, rejection, or a counter-offer.

 

• Remember, a delay in response does not necessarily indicate a refusal; exercise patience and persistence throughout the negotiation process.

 

Expert Tip

• Prior to initiating negotiations, gather pertinent information on current market prices and property valuations from banks. This data will empower you to formulate a reasonable and strategic offer, enhancing your negotiation position and increasing the likelihood of a successful deal.

 

 

4. Signing the Provisional Agreement

 

Engage in Agreement

• Enter into a Provisional Agreement for Sale and Purchase with the vendor, typically facilitated by the estate agent.

 

• Before signing the PASP, it is crucial to perform an updated land search and review the land record pertaining to the property. This record provides essential details about the property's ownership, full address, government lease terms, compliance status, existing mortgages, and any outstanding government orders.

 

Obtain Property Information

• Utilise Property Information Online service from the Rating and Valuation Department to access vital property details such as saleable area, age, and permitted occupation purposes.

 

• Your agent can assist in obtaining and interpreting this information to support your decision-making process.

 

Pay an Initial Deposit

• Submit an initial deposit, usually ranging from 3 to 5% of the purchase price, to the vendor.

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• It is important to note that withdrawing from the agreement after signing results in forfeiture of the initial deposit, with obligations to pay agent commissions as specified in the agreement.

 

Key Note

• The land record serves as a critical source of information, offering insights into the property’s ownership status, government orders, existing mortgages, and other pertinent details. Understanding this information is essential for making informed decisions and mitigating risks associated with the property transaction.

 

 

5. Legal Due Diligence

 

Hire a Solicitor

• Retain the services of a reputable solicitor to review the Agreement for Sale and Purchase (ASP) prepared by the vendor’s solicitor, conduct comprehensive due diligence, and offer legal counsel throughout the property transaction process.

 

Review the Agreement

• Thoroughly examine the ASP, paying close attention to any additional clauses that may affect the transaction.

 

Conduct Due Diligence

• Entrust your solicitor to perform a meticulous due diligence process on the property, which includes scrutinising the title deeds (documents indicating property ownership), examining property records and encumbrances, and verifying the presence of any outstanding debts or liabilities associated with the property.

 

Expert Tip

• When selecting a solicitor firm for your property conveyancing needs, obtain and compare quotes and service offerings from multiple reputable firms. Ensure that the chosen firm maintains a business relationship with your preferred bank, as this can streamline communication and facilitate a smoother transaction process.

 

 

6. Financing

 

Apply for a Mortgage

• Initiate the mortgage application process by submitting an application to a bank or financial institution, supported by a copy of the signed PASP.

 

Obtain a Mortgage Offer

• Upon approval of the mortgage application, you will receive a facility offer letter detailing the loan amount, interest rate, and repayment terms.

 

• It is essential to review the offer carefully as you have two weeks to accept the loan terms.

 

Expert Tip

• You may submit several mortgage applications to different banks simultaneously to explore competitive offers. Sizable financial institutions such as HSBC, Hang Seng Bank, Bank of China (Hong Kong), and Standard Chartered often provide more favourable interest rates and terms compared to smaller banks. However, you are advised not to make more than four mortgage applications as too many applications may adversely affect your credit rating.

 

Recent Update

• According to the guidelines of Hong Kong Monetary Authority (HKMA) issued to banks on 28 February 2024, “For residential properties for self-occupation, the maximum loan-to-value (LTV) ratios will be adjusted to 70% for properties valued at HK$30 million or below.” For more details, please refer to Countercyclical Macroprudential Measures for Property Mortgage Loans.

 

Mortgage Insurance Programme

• The Hong Kong Mortgage Corporation Limited offers the Mortgage Insurance Programme, which assists in easing the down payment burden for homebuyers, facilitating property acquisition.

 

 

7. Signing the Formal Agreement

 

Sign the Formal Agreement

• Within 14 days of signing the Provisional Agreement for Sale and Purchase (PASP), proceed to sign the Agreement for Sale and Purchase (ASP) at your solicitor’s office. The ASP supersedes the PASP, further formalising the property transaction.

 

• If the ASP is signed after the 14-day period, the PASP must also be stamped (the current stamp duty is $100) and registered at the Land Registry.

 

Pay a Further Deposit

• Complete the total down payment, which comprises the initial and further deposits, typically amounting to 10% of the purchase price.

 

• To safeguard your interests, both deposits should be held by the vendor’s solicitor firm as a stakeholder if the property is encumbered by an undischarged mortgage. This arrangement minimises potential losses in case the vendor fails to discharge the existing mortgage before the transaction completion.

 

Settle the Stamp Duty

• Fulfil the payment of ad valorem stamp duty (AVD), a one-time expense payable to the Inland Revenue Department of the Hong Kong SAR Government. The stamp duty rates vary based on different property prices.

 

• If the purchase price is below the market value, the stamp duty will be calculated according to the property’s market price. Please refer to the “Rates at Scale 2” at Stamp Duty Rates.

 

Recent Update

• Following the Financial Secretary’s 2024-25 budget speech on 28 February 2024, all demand-side management measures for residential properties have been lifted with immediate effect. In other words, Special Stamp Duty (SSD), Buyer’s Stamp Duty (BSD), and New Residential Stamp Duty (NRSD) no longer need to be paid for any residential property transactions. This act has successfully rejuvenated the year-long sluggish property market.

 

 

8. Property Transfer

 

Conduct a Final Inspection

• Prior to the completion day, conduct a thorough final inspection of the property. This inspection is crucial to verify that the property's condition at handover matches the previously agreed-upon state.  

 

Arrange Property Transfer

• On the completion day, the property will be officially transferred to your name. This process involves signing a final document, known as the assignment, and registering it with the Land Registry. Your solicitor will handle the necessary paperwork and legal formalities to complete the transfer.

 

Pay the Balance

• Once the transfer is in progress, you will need to settle the remaining balance of the purchase price through your solicitor. If you have secured a mortgage loan, your solicitor will coordinate with the bank to draw down the loan funds and use them to pay the outstanding amount to the vendor.

 

Obtain the Keys

• Upon successful completion of the property transfer, the vendor will hand over the keys of the property to you, either through your solicitor or their estate agent. This symbolic act marks the official transfer of possession to the new owner.

 

 

9. Post-Purchase Tasks

 

Settle Other Payments

• After the property transfer is complete, ensure that you make timely payments for all the associated costs, such as legal fees, agency fees, and any other expenses related to the transaction. Fulfilling these financial obligations is crucial to ensure a smooth and successful property purchase.

 

Pay for the Mortgage

• If you have secured a mortgage to finance the property, make the initial mortgage payment and set up a standing instruction with your bank for future payments. This will help you maintain a consistent repayment schedule and avoid any late or missed payments, which could have serious consequences.

 

Insure the Property

• Safeguard your investment by acquiring comprehensive property insurance coverage. This will protect your property and belongings against various risks, such as fire, theft, natural disasters, and other potential hazards. Property insurance provides valuable financial protection and peace of mind as a new homeowner.

 

Register for Utilities

• Contact the relevant utility service providers, such as Water Supplies Department, and electricity and gas companies, to open accounts for your new residential property. Ensuring the seamless provision of these essential services will make the transition to your new home much smoother.

 

 

10. Moving In

 

Prepare for Your Home

• Before you move in, take time to prepare your new property for a comfortable and welcoming living environment. This may involve tasks such as:

  • Renovations and decorations to suit your personal needs

  • Servicing the air conditioning units to ensure normal and optimal functioning

  • Implementing pest control measures to maintain a sanitary home

  • Cleaning the entire property thoroughly 

 

Arrange the Moving Process

• Organise the moving process by either hiring a professional moving company or enlisting the help of friends and family to assist with the relocation. This will help ensure a smooth and efficient transition to your new residence. Consider factors such as the amount of belongings, the accessibility of the new property, and the availability of helpers to make the moving process as seamless as possible.

 

Apply for Resident Cards

• In many modern residential estates, residents are often required to apply for resident cards to access the property complex or use the communal facilities, such as the clubhouse. Ensure that you complete the necessary paperwork and obtain the required resident cards to fully enjoy the amenities and security services.

 

 

11. Property Maintenance and Upkeep

 

Maintain the Property

• Establish a regular schedule for inspecting and maintaining your property to ensure its condition and functionality are preserved over time. This includes:

  • Addressing any necessary repairs in a timely manner

  • Conducting preventive maintenance measures

  • Promptly attending to any emergency issues

 

Pay Property-Related Fees

• Ensure that you make timely payments of all property-related fees, including:

  • The monthly property management fee, which covers the regular services and maintenance within the property complex

  • Quarterly rates and government rent, to comply with regulatory requirements

 

 

By diligently adhering to these steps and recommendations, you can efficiently manoeuvre through the intricacies of purchasing a residential property in Hong Kong. It is essential to prioritise seeking expert guidance and conducting comprehensive research to ensure well-informed decisions at every stage of the process.

 

As for the purchase of a developer’s first-hand residential property, the procedures are similar to acquiring a second-hand one. The arrangements of signing the provisional and the formal agreements, payments of deposits and balance vary according to different payment plans and terms offered by the developer. For more information, please refer to this booklet: Notes to Purchasers of First-hand Residential Properties.

 

Further reading: Sale & Purchase of Property by Community Legal Information Centre, The University of Hong Kong

 

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