While The Real Estate Developers Association of Hong Kong (“REDA”) supports the government’s objectives behind the introduction of the Special Stamp Duty (“SSD”) to “curb short-term speculation”and “to reduce the risk of an asset bubble and ensure the healthy and stable operation of the property market” while not affecting genuine home buyers and long-term investors, we have reservations as to whether these can be achieved through the Bill as currently drafted.
Though the SSD is described as an extraordinary measure to counter current exceptional circumstances, no date or “Sunset Clause” has been set for the termination of the SSD when the exceptional circumstances no longer exist, nor is there a mechanism for the Legislative Council (“Legco”) to review the suitability of the SSD in future. As it stands now, the Bill will incorporate SSD as a permanent feature of the Stamp Duty Ordinance.
Secondly, REDA is very concerned that the Bill will cause unintended collateral damage to homeowners and genuine investors who may be forced to sell their properties due to unforeseen changed circumstances, such as financial difficulties. We, therefore, recommend that the scope of exemptions should be expanded beyond the current limited number.
In addition, we view this SSD as an entirely new tax which has been announced without proper consultation, and that the government has adopted an attitude that it is law before it has been thoroughly scrutinized by Legco. For the sake of fairness and to protect the interests of genuine investors and homeowners, we believe the SSD should not apply to anyone who entered into a provisional agreement for sale and purchase in good faith prior to November 20, 2010.
There are several other issues that REDA has voiced at the Bills Committee meeting today which we believe will defer, constrict and delay the supply of housing for Hong Kong people and have unintended consequences to the long term health of the property market. We are hopeful that the government will review and redraft this Bill with appropriate consultation before putting it to Legco for a vote.