Common Mistakes in Hong Kong Property Purchases

Published on October 31, 2025 and written by Cyril Jarnias

Investing in Hong Kong Real Estate

Investing in real estate in Hong Kong can be a profitable but complex venture, especially if you’re not well prepared. Many fall into the trap of common mistakes, often costly ones, when purchasing property in this dynamic city.

From incorrectly assessing market value to overlooking hidden additional costs, knowing that every detail matters in such a project.

Mistakes to Avoid

This article examines the main pitfalls encountered by buyers and offers practical advice to avoid them, ensuring a successful and optimized purchasing experience.

Understanding Hong Kong’s Complex Real Estate Market

Understanding specific government regulations and restrictions on property purchases by foreigners in Hong Kong is a crucial step for any non-resident investor or buyer. Hong Kong offers an open market where, in principle, there are no limitations on the purchase of residential or commercial properties by foreigners: they can buy in their own name or through a company, without nationality restrictions. However, certain public properties (notably from the Housing Authority) are reserved for permanent residents and are not available on the open market.

The determining factor lies in taxation:

• Foreigners must pay a Buyer’s Stamp Duty (BSD) of 15%, in addition to the usual stamp duties.
• When acquiring a second (or more) property, the Ad Valorem Stamp Duty (AVD) can also reach 15%.
• A Special Stamp Duty (SSD) between 10% and 20% is applied if resale occurs within three years of purchase.
• Additional fees include notary, real estate agency, and registration costs.

Tax / Fee	Rate for Foreigners	Detail
Buyer’s Stamp Duty (BSD)	15%	On all residential purchases
Ad Valorem Stamp Duty (AVD)	Up to 15%	For a second property or more
Special Stamp Duty (SSD)	10% to 20%	If resold within 3 years

Mistake of Underestimating Additional Costs

When purchasing property in Hong Kong, it’s essential to account for a range of additional costs that can significantly increase the initial budget. Neglecting these fees exposes you to major financial risks, including exceeding the planned budget and the need to reduce or postpone other projects or expenses.

Type of Cost	Amount / Indicative Range	Comments / Local Particularities
Real Estate Agency Commission	Approx. 1% of purchase price	Often buyer’s responsibility, negotiable
Stamp Duty	Ad valorem: up to 15%	Progressive based on value; additional BSD (15%) for non-residents; SSD up to 20% for quick resale
Notary/Lawyer Fees	~0.3% of price	Mandatory to secure the transaction
Technical Inspection	Approx. 5,000 HKD	Recommended before purchase
Registration Fees	Approx. 2,500 HKD	Administrative formality
Annual Condominium Charges	~28,800 HKD/year for average apartment	Varies by residence
Partial Renovation Cost	Starting from ~120,000 HKD	Depends on planned work

Concrete example for a non-resident purchase (apartment at 10 million HKD):

• Real Estate Agency Commission: 100,000 HKD
• Ad Valorem Stamp Duty (15%): 1,500,000 HKD
• Buyer’s Stamp Duty (15%): 1,500,000 HKD
• Notary Fees (~0.3%): 30,000 HKD
• Technical Inspection: 5,000 HKD
• Registration Fees: 2,500 HKD

That’s already over ***3.16 million* HKD**, excluding financing and annual charges. A partial renovation would push this immediate total beyond *3.25 million* additional.

> ⚠️ The actual additional cost can exceed *30–35%* of the listed price.

Financial Risks Linked to Poor Anticipation of Additional Costs:

• Significantly exceeding your initial budget and having to take out a larger loan than planned.
• Compromising the ability to finance other important expenses like furnishing or unexpected costs.
• Exposing yourself to the risk of excessive debt or having to sell hastily at a loss if liquidity is lacking after acquisition.

Summary List of Often Underestimated Items:

• Cumulative government taxes
• Mandatory professional fees
• Recurring costs related to common charges and maintenance
• Potential work for compliance or customization

In Hong Kong, it is imperative to include all these ancillary fees in the financial plan from the start of the real estate project. Their magnitude can radically transform the actual profitability and personal viability of the project.

Neglecting Thorough Property Research

The importance of thorough research when buying real estate in Hong Kong is paramount, given the market’s complexity, high prices, and fierce competition. Neglecting this step exposes you to major risks that can have serious financial and legal consequences.

Risks Linked to a Lack of Thorough Research:

• Purchase of an Overvalued Property:
  • The Hong Kong market is characterized by significant volatility and rapid price fluctuations. Without precise analysis of the neighborhood, the property, and recent market trends, it’s easy to pay more than the actual value.
  • Example: a buyer who relies solely on listings or sales pitches might buy an apartment just before the market undergoes a sudden correction.
• Unidentified Structural Problems:
  • Apartments are often small and space-optimized; some defects (dampness, poor workmanship in older buildings) can be hidden or minimized during quick visits imposed by competition.
  • Example: purchase without prior inspection leading to the later discovery of major leaks requiring significant unbudgeted work.
• Ongoing Legal Disputes or Uncertain Titles:
  • The acquisition can be compromised if the seller isn’t the full owner or if the property is subject to legal proceedings (partial expropriation, contested inheritance).
  • Real example in the local market: canceled acquisition after late discovery that an heir was contesting the sale in court.

Main Risk	Possible Consequence	Specific Example
Overvalued Property	Significant Financial Loss	Purchase before rapid sector decline
Structural Defects	Unexpected Costs/Uninhabitability	Post-purchase discovery of chronic dampness
Legal Dispute/Non-compliance	Cancellation/Delay/Lawsuit	Sale blocked due to inheritance issue

To limit these risks, you should rely on various reliable local resources and follow several essential steps:

Key Steps for Conducting Thorough Research:

• Complete Physical Inspection:
  • Detailed visit with meticulous checks (general condition, plumbing/electricity/air conditioning).
  • Ideally hire an independent inspector specialized in Hong Kong constructions.
• Legal Verification via Land Registry:
  • Ensure the property title is clear, with no hidden mortgages or disputes affecting the building.
  • Mandatory consultation with a local lawyer specialized in real estate law to verify all registered deeds.
• Comprehensive Document Analysis:
  • Review recent condominium meeting minutes (to detect internal tensions/planned renovations).
  • Systematic request for energy certificate if applicable.
• Local Professional Consultation:
  • Use the services of:
    • A licensed real estate agent familiar with the target area.
    • A financial advisor to anticipate specific taxes (Buyer’s Stamp Duty up to 15%, other duties).

Summary List of Useful Resources:

• Public Land Registry
• Recognized Real Estate Agencies
• Independent Technical Inspectors
• Local Specialized Notaries/Lawyers

⚠️ A purchase made without these precautions directly exposes the investor to overpaying for their home or facing costly hidden defects that may be legally unresolvable. In this highly competitive context where every mistake can be costly—or even compromise any residential or rental project—only a rigorous process allows for a smooth acquisition.