Lawyer’s fee
The purchase of a property generally involves three main legal documents: sale and purchase agreement, deed of assignment and mortgage deed. The solicitor’s fee, will be subject to the transaction value and the age of the property, and it usually amounts to several thousand Hong Kong dollars or more.
The older the property or if a village house is involved in a dispute over ownership issues, the legal fee will be higher as lawyers will need to conduct a comprehensive f information search about the property.
Legal charges covering the mortgage deed is based on the loan amount. It is advisable to check with a law firm the details of the fees. If a buyer does not have a lawyer that he or she is familiar with, the latter can ask for a referral from an estate agent.
Premium charge on a mortgage
First-time buyers can receive a loan-to-value ratio of 80 percent for flats that cost HK$6 million or less through the Hong Kong Mortgage Corporation’s insurance scheme.
In the case of flats that cost HK$4 million or less, first-time buyers can get a loan-to-value ratio of 90 percent. Applicants must have a fixed income and they should also pass banks’ stress test.
In addition, successful applicants are required to pay a premium for the mortgage insurance.
The longer the term of a mortgage and the higher the mortgage rate is, the more expensive the premiums will be. However, the premiums can actually be included in the mortgage loan amount, which can be extended by the bank in one go.
Buyers with tight budgets need not set aside as much as HK$100,000 to pay for the mortgage insurance premium.
In addition, banks generally require mortgage loan customers to have their properties insured and covered by fire insurance at the same time. The premium is generally less than 0.15 per cent of the insured amount.
Management fee
A property involves different types of expenses, including security, cleaning, maintenance and repairs of housing estates and clubhouse facilities. Residents generally need to pay management fees and deposits for management fees, while buyers of flats in new projects from developers generally need to pay for the construction waste disposal and other types of fees. In recent years, management fees in new residential projects have increased. In terms of saleable area, the amount of management fee ranges from $2 to $5 per square foot, while that in individual luxury houses is more expensive and usually in double digits.
Rates and rent
Rates and government rent are prepaid in four quarters a year. The annual rates and government rent is equivalent to 5 per cent and 3 percent, respectively, of the rateable value. The Rating and Valuation Department will generally issue a notice to inform owners of the amount that the property owner needs to pay at the beginning of each quarter. A new property owner must settle the payment on or before the payment deadline.
Agency commission
Property sales are generally conducted through real estate agents, and transactions entail payment of commissions to agents. The current law does not stipulate the amount or rate of commission charged by real estate agents. If buyers buy flats in the primary market, commissions are usually paid by the developer.