Procedure for purchasing property

Posted by BB (264 days ago)

I have been a home owner in the UK. New to purchasing in HK. Has anyone got a check list of when you do what and when, what documents have to be signed before when etc? or a website that has a checklist. It would save me alot of time. Appreciate any help/advice tc. BB

Posted by Saikunga (264 days ago)

If you find a place you like, the real estate agents are usually pretty good at taking you through the ropes - ouch.and if you get a good solicitor, they do everything and you just sign the bits that you need to sign.

Just make sure that before you put any money down that you actually do have the finances forthcoming - otherwise you lose your deposit if you have to bail out due to not having any finances due to banks not giving you enough to cover the cost of the purchase - ouch.

From memory the steps go like this....

Find a place you like
Negotiate the real estate's cut if you decide to purchase
Don't sign the S&P yet
Find finance for the purchase - see if you can afford it, bank evaluation, arranging a possible loan
Include anything you want in the purchase contract.
Negotiate the price
Sign the S&P and hand over your 10% deposit.
Go back to the bank with the S&P to get a loan
Organise your finances
Find a solicitor - give them the S&P to work from
They talk to the other solicitor to sort it all out.
They also talk to the bank.
Meet with the solicitor to be briefed on what you are purchasing
Sign the purchase agreements and hand over the balance.
Move in.

Anyone else can fill in the blanks??

Posted by ldavy (264 days ago)

Only to say that you first sign the Provisional Agreement for Sale and Purchase, and pay an initial 5% deposit. Usually two weeks later you sign the Formal Agreement for Sale and Purchase, and pay a second 5% deposit. About one month after that is completion, when you pay the balance of the purchase price. Sometimes the deposit is 3% and 7%, and sometimes the vendor demands 10% on signing of the Provisional, but 5% and 5% are more common.

Posted by walkup (264 days ago)

The first questions are where is the purchase money coming from and how are you going to pay for the 2 deposit tranches of (total) 10% when you decide to buy. Next is to have lined up a lawyer and bank account when you want to hit the go-button.

Posted by pebbles1 (255 days ago)

You also have to pay the Government stamp duty near the beginning of the purchase so just be aware of that as it can be heavy - depending upon your purchase price. This is unlike the UK where you pay it on completion.

Posted by walkup (254 days ago)

I am not sure that is right pebbles re paying stamp duty before property completion.

Posted by pebbles1 (254 days ago)

Walkup - yes you are right in saying "i am NOT sure that is right pebbles re paying stamp duty before completion".

I have just bought another property in HK a few months ago & here's how it went after the offer had been agreed:

Sign the S&P with the estate agent & at that point handover 4% of the deposit.
2 weeks later hand over pay the remaining 6% deposit AND the stamp duty to the solicitor & it goes on from there. I then did not complete on the property for another 24 days AFTER I had paid the stamp duty that both my solicitor & estate agent said had to be paid then - so are you telling me that THEY are wrong in demanding the stamp duty money so soon or are you telling me that you don't know......if it is the latter then you need to re-phrase your question & not make it sound like I have made an incorrect statement. That was my experience of buying property in HK as well as others I have known who have done the same thing - if you are telling me that the solicitors are sitting on the money & earning interest off of it then I will take the issue up with them as I will not be very happy, somehow I don't think you are.

Posted by ltxhk (253 days ago)

pebbles1.... it depends on the solicitor when you pay the stamp duty. Can't say if the ones collecting up front are earning interest..... but having purchased several properties, we never paid the stamp duty up front. The solicitor collected a few days prior to completion.

Posted by pebbles1 (253 days ago)

Hi Ltxhk - you obviously have some great solicitors! Can I have their details!

I have just spoken to a number of solicitors & my estate agent whom I trust 110% & their response was as follows:

Standard procedure is to pay the stamp duty upon signing the S&P which is generally 2 weeks after you have paid the 1st part of your deposit (my apologies - I miss typed that above - was tired when I wrote it!). However if you want to delay paying stamp duty you can apply to the government for a deferral to pay on completion - I was informed that the acceptance of this depends upon the individual case. In other words you have to have a very good reason why you want to delay. My agent/sols say that they only one's they know that have been approved tend to be for much higher purchasing amounts where the amount of stamp duty owed is significant & the only other scenario they know of for your 'average' buyer was just after SARS - which is understandable.
I mentioned your comment Ltxhk & was told that maybe because you put a lot of business your solicitors way & they know you that they pay it upfront for you & just bill you on/before completion so you think it's paid on completion. If that is not the case then I would love to know & again would love your solicitors details.
When my agent bought her flats (investment & residential) she had to pay it on the signing of the S&P.

Posted by walkup (253 days ago)

The website providing info re stamp duty is here: http://www.ird.gov.hk/eng/tax/sdu.htm
It appears that the duty is formally liable within 30 days of the first agreement to purchase. Also that the stamp duty is reclaimable if the purchase does not go through.
In my case there was a significant time gap between agreement and completion and the stamp duty (together with lawyer fee in one lump) wasn't paid by me until about 10 days before completion, so either the lawyer paid the stamp fee up front or there is an unofficial 'arrangement' with the legal profession as to when the money is actually paid in.