Following is a question by the Hon Doreen Kong and a reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (July 30):

Question:

     There are views pointing out that the economic downturn in recent years has led to rising vacancy rates of non-residential properties (e.g. shops and offices), thus exerting heavy operational pressure on property owners. In this connection, will the Government inform this Council:

(1) whether it will consider allowing owners of non-residential properties to pay the stamp duty on such property transactions by instalments, so as to alleviate their financial pressure;

(2) whether the Government will consider introducing policy incentives and initiatives, such as suitably relaxing the restrictions on investment in non-residential properties by foreign investors or applicants under the New Capital Investment Entrant Scheme, lowering the stamp duty rates for non-residential properties, as well as providing financing incentives or streamlining the investment approval process, so as to attract international capital and enhance the level of transaction activity in the market; and

(3) given that some owners of non-residential properties have reflected that despite the downward adjustments in the rental values of the properties held by them in recent years, they still need to pay high rates and Government rent, whether the Government will draw reference from the practices in places such as the United Kingdom and Australia and consider introducing temporary rates concession measures for non-residential properties, so as to assist property owners in coping with the pressure of the economic downturn?

Reply:

President,

     Before responding to the Hon Doreen Kong's questions, I would first provide an overview of Hong Kong's latest economic situation and the market conditions of non-residential properties.

     Hong Kong's economy continues to grow steadily. Real gross domestic product rose by 2.5 per cent in the full year of 2024 and expanded by 3.1 per cent year-on-year in the first quarter of 2025, picking up from the 2.5 per cent growth in the preceding quarter. Meanwhile, according to the Rating and Valuation Department (RVD), the overall vacancy rates for private offices and private commercial premises stood at 16.3 per cent and 11.8 per cent respectively at the end of 2024, representing increases of 1.4 per cent and 1.5 per cent compared to 2023. This indicates that vacancy rates for non-residential properties are not solely determined by Hong Kong's overall economic performance. Other contributing factors include the supply of properties, operation and development situation of individual enterprises, shift in consumption patterns of local residents and tourists, etc. Besides, property owners would also consider various factors when deciding whether to lease out vacant properties, such as market trends, their asset management strategies and financial positions, rental level, etc.

     The Government has been closely monitoring the situation and developments in the non-residential property market. In light of the vacancy rate of offices in recent years and the relatively ample supply of non-residential properties in the next few years, the Government has not put up commercial sites for tender since 2023/24, so as to allow the market to absorb the existing supply. In addition, the Government has been actively attracting investments. For example, from January 2023 to June 2025, Invest Hong Kong assisted over 1 300 overseas and Mainland enterprises in setting up or expanding their businesses in Hong Kong, which helps stimulate demand in the local non-residential property market.

     My responses to the three questions raised by the Hon Kong are as follows:

(1) We currently have no plan to allow payment of stamp duty on non-residential property transactions by instalments, based on three primary considerations:

     First, the stamp duty for non-residential property transactions currently ranges from $100 to a maximum rate of 4.25 per cent, constituting only a very small portion of the transaction cost. The maximum rate only applies to a transaction with an amount or value of consideration exceeding about $21.74 million. As stamp duty is usually borne by buyers, we do not consider that its current payment arrangement would impose financial pressure on non-residential property owners.

     Second, according to the Stamp Duty Ordinance, the Collector of Stamp Revenue should stamp an instrument upon payment of stamp duty. In other words, the instruments cannot be stamped before payment of all instalments. Generally speaking, instruments that are not stamped cannot be received in evidence in civil proceedings, nor can they be registered at the Land Registry.

     Third, the volume of the non-residential property market has been relatively stable over the past year. According to the statistics of the Inland Revenue Department, the first quarter of 2025-26 recorded approximately 3 600 stamping applications for non-residential properties, representing a year-on-year increase by about 17 per cent. Total transaction value also increased by more than 30 per cent to about $20 billion. Therefore, we do not see a need to change the payment arrangement of stamp duty on non-residential properties.

(2) As I mentioned earlier, the Government has been promoting inward investment and closely monitoring the situation and developments in the non-residential property market.

     Regarding the suggestions mentioned in the question, I would briefly respond as follows:

     The Hong Kong Monetary Authority currently does not impose any restriction on the mortgage-to-income ratio nor loan-to-value ratio for investors outside Hong Kong. When considering loan applications, each bank takes into account a range of factors, including the bank's business strategy, the purpose of the loan, the customer's credit history and repayment ability, to comprehensively assess whether to approve the loan and its terms. Whether a bank offers mortgage loan incentives (such as cash rebates) to applicants is its commercial decision.

     Currently, the New Capital Investment Entrant Scheme allows applicants to invest in both residential and non-residential properties. The amount that is counted towards the total capital investment is subject to a cap of HK$10 million, already representing one-third of the scheme's minimum investment requirement. The Government will continue to review the investment patterns of applicants and evaluate the arrangements as necessary.

     In end February 2023, the Government has raised the maximum value of properties chargeable to $100 stamp duty from $2 million to $3 million and adjusted other value bands of stamp duty. In end February 2025, the Government has further raised the maximum value of properties chargeable to $100 stamp duty to $4 million. These measures help reduce the stamp duty of some residential and non-residential property transactions. We currently have no plan to further adjust stamp duty to promote inward investments.

(3) Currently, rates for non-residential properties are charged at 5 per cent of the rateable values of the properties, which is the same as that for residential properties with rateable values of or below $550,000. The RVD conducts annual general revaluation for all properties, including non-residential properties, so as to ensure that the rateable values for charging rates and government rent are assessed based on the latest market rental level. According to the statistics of RVD, rental indices and rateable values of private offices decreased by about 18 per cent and 16 per cent respectively in the five years between October 2019 and October 2024. These figures show that the RVD's valuation has properly reflected the change in market rental level in recent years, which reduces the rates for non-residential properties. Furthermore, the progressive rating system implemented since 2025 does not apply to non-residential properties, with the rates percentage charge for which maintaining at 5 per cent. We therefore consider the current rates percentage charge for non-residential properties reasonable, and the annual revaluation of rateable values responsive to the latest market dynamics.

     Thank you, President.

Ends/Wednesday, July 30, 2025
Issued at HKT 12:45

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