Property sales are normally managed by a property agent who does the due diligence, offers price comparisons and negotiates for you in order to set a date for the transaction.
Once you are sure about the property you want to buy and agree on the price and all of the terms and conditions, the agent prepares the offer letter and arranges for signing of the Provisional Sale and Purchase agreement. A deposit (5% of the sale price) is paid to the owner or owner’s solicitor. If you change your mind, you lose the deposit and still have to pay the agent’s fee of 1% of the price.
Within 14 days, the final Sales and Purchase Agreement should be drawn up between the solicitors on both sides, then signed. A further deposit of 5-10% makes the agreement legally binding. By this time, any mortgage should be confirmed and a mortgage deed signed as well.
The balance on the purchase needs to be paid to the seller’s solicitor within two to three months. The seller’s solicitor will inform you about the payment of government rates and management fees. You will also have to pay the property agent a commission of 1% of the purchase price. In addition stamp duty is calculated on the value of the property (usually between 0.75 and 3.75%) and becomes payable to the Inland Revenue Department.
Pre-sale agreements (offplan property)
In some cases developers pre-sell apartments in a building that is under construction. These can be bought for private use, to rent out or to speculate on price rises with a view to selling the apartment on when it is completed. If you plan to resell the apartment, you must let the developer know as there are sometimes transfer charges and changes might need to be made in the provisional title. To protect yourself in case the construction is not completed, you can ask for a guarantee from the developer’s solicitor.
Selling your property at the right time is as important as choosing when to buy it. If you are moving out of Hong Kong or the market is hot, you may decide to sell. Typically, you will advertise your property through one or multiple agents who will find buyers and take care of the paperwork. Both the seller and buyer pay an agent’s commission of 1% of the sales price. In addition, you will have to pay legal fees for a solicitor.