First-time Homebuyer Exclusive: Basic Stamp Duty and High Loan-to-Value Ratio Mortgage
First-time Homebuyers are only required to pay the basic stamp duty, they are also eligible to apply for a mortgage loan of up to 90% loan-to-value ratio with mortgage insurance. This article explains the eligibility and entitlements for first-time homebuyers to help you plan your budget and get ready for home ownership.
To encourage a wider home ownership, the government has introduced mortgage insurance policies that allow homebuyers to purchase properties with a lower down payment, and enable first-time homebuyers who are permanent Hong Kong residents to pay less stamp duty. Are you eligible as a first-time homebuyer?
First-Time Homebuyer Eligibility
According to the requirements, there is no asset restriction for first-time homebuyers, provided that they do not own any other residential property at the time of transaction. In fact, even if a person previously owned a residence but has since sold it, or jointly owned a property with others but had his/her name removed from the title deeds, they are still eligible as "first-time homebuyers" as long as they do not own any other residential property by the time of the transaction.
Highlight 1 for First-time Homebuyers: Only pay the basic ad valorem stamp duty (AVD)
Property stamp duties in Hong Kong include the ad valorem stamp duty (AVD), special stamp duty (SSD) and buyer's stamp duty (BSD). Generally speaking, first-time homebuyers just have to pay the AVD, whereas SSD will be payable by short-term speculators, and BSD by homebuyers who are non-Hong Kong permanent residents or companies.
First-time homebuyers (if they are Hong Kong permanent residents) can pay AVD at the Inland Revenue Department's Scale 2 rates, which can be as low as $100 depending on the property’s value. On the other hand, non-first-time homebuyers are subject to a flat rate of 7.5% AVD.
| AVD for First-Time Homebuyers - Residential (Rates at Scale 2) | AVD for Non-First-Time Homebuyers - Residential | |
|---|---|---|
| Amount or value of the consideration (whichever is the higher) | Tax rate/ Tax Amount | Tax rate/ Tax Amount |
| Up to $3,000,000 | $100 | Flat rate of 7.5% |
| $3,000,001 to $3,528,240 | $100 + 10% of the excess over $3,000,000 | |
| $3,528,241 to $4,5000,000 | $1.5% | |
| $4,500,001 to $4,935,480 | $67,500 + 10% of the excess over $6,000,000 | |
| $4,935,481 to $6,000,000 | 2.25% | |
| $6,000,001 to $6,642,860 | $135,000 + 10% of the excess over $6,000,000 | |
| $6,642,861 to $9,000,000 | 3.00% | |
| $9,000,0001 to $10,080,000 | $27,000 + 10% of the excess over $9,000,000 | |
| $10,080,001 to $20,000,000 | 3.75% | |
| $20,000,001 to $21,739,120 | $750,000 + 10% of the excess over $20,000,000 | |
| $21,739,121 and above | 4.25% | |
For example, when purchasing a $8M residential property, eligible first-time homebuyers are only required to pay 3% AVD, or $240,000, while non-first-time homebuyers have to pay 7.5% AVD, or $600,000.
| Residential property valued at $8M | |
|---|---|
| First-time homebuyer Ad valorem stamp duty: $240,000 (3%) |
Non-first-time homebuyer Ad valorem stamp duty: $600,000 (7.5%) |
Tips:
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Non-Hong Kong permanent residents are required to pay an additional buyer's stamp duty (BSD) of 7.5% on the property stated consideration or market value (whichever is higher).
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If the buyer is a permanent resident and successfully sells out his/her previous one and only residence within 12 months from completing the new transaction, and meeting the requirements of the Inland Revenue Department, he/she will be eligible for a refund of the excess initially paid as a non-first-time homebuyer at 7.5% over the basic tax applicable for him/her as a first-time home buyer.
- For eligible incoming talents who have purchased residential property in Hong Kong on or after 25 October 2023 and at the time of acquisition of the property concerned did not own any other residential properties in Hong Kong, they can apply for a suspension of the Buyer’s Stamp Duty (7.5%) and the New Residential Stamp Duty (7.5%) for the residential property purchased, but they still need to pay Ad Valorem Stamp Duty (AVD) at Scale 2 rates. Such that the overall stamp duty charged will be the same as the first-time homebuyers who are permanent residents. Upon becoming a Hong Kong permanent resident, they can apply for a wavier in relation to the stamp duty suspended before deadline (i.e. 9 years from first permitted to stay in Hong Kong under the relevant incoming talent scheme). Eligible incoming talents include those who enter Hong Kong under designated talents admission schemes, including General Employment Policy (GEP), Admission Scheme for Mainland Talents and Professionals (ASMTP), Quality Migrant Admission Scheme (QMAS), Technology Talent Admission Scheme (TechTAS), Immigration Arrangements for Non-local Graduates (IANG), Admission Scheme for the Second Generation of Chinese Hong Kong Permanent Residents (ASSG) and Top Talent Pass Scheme (TTPS).
Note: For stamp duty details, information sourced from Inland Revenue Department website, and information may subject to change from time to time, please refer to the website for the latest information. Implementation of the measures and timeline should refer to the announcement by the government..
Highlight 2 for First-time Homebuyers: Higher loan-to-value ratio mortgage
Homebuyers can apply for a higher loan-to-value (LTV) ratio mortgage when purchasing a property for self-occupancy. First-time homebuyers who satisfy certain requirements may apply for a mortgage loan of up to 90% loan-to-value ratio with mortgage insurance, so that they can purchase a property with as low as 10% down payment.
Under the new mortgage insurance plan, first-time homebuyers with a regular salary can apply for a mortgage loan of up to 90% LTV ratio when purchasing a property worth more than $4M to $10M; a 80%-90% LTV mortgage loan for properties valued above $10M and less than $11.25M (maximum loan limit of $9M); a mortgage loan of up to 80% LTV ratio for properties valued at $11.25M to $15M; and for a property valued above $15M to $17.15M, you can borrow a mortgage loan with LTV ranging from 70% to 80% (maximum loan limit of $12M). For property value above $17.15M to $30M, the maximum LTV ratio is 70%.
If you apply for the traditional mortgage insurance plan, first-time homebuyers with a regular salary can get a mortgage loan of up to 90% LTV for properties valued at $4M or less; and up to 80%-90% LTV for properties valued above $4M but less than $4.5M (maximum loan limit of $3.6M); for properties valued at and above $4.5M to $6M, you may obtain a mortgage loan of up to 80% LTV (up to a maximum loan limit of $4.8M).
The specific details for high LTV ratio mortgages especially on property under construction are subject to mortgage insurance company’s terms and conditions. Approval is subject to final credit assessment and the final valuation of the property according to each individual case. For mortgage insurance programme cases, it is also subject to final approval of the related insurance company.
Tips:
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In order to be eligible for an 80%-90% LTV mortgage, he/she must be a first-time homebuyer with a regular income, and satisfy specific requirements.
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