Government Sets Out Plan To Tax Vacant Homes

The government has revealed details of how its proposed tax on vacant homes will operate, with developers given a year to sell flats before being hit with a bill for 200 per cent of its rateable value.

The tax, first announced last year, is intended to stop developers from holding back some of the flats at a new development for sale later, when prices have increased.

Under the tax, developers will have to sell within a year of receiving an occupation permit. Alternatively, a developer can let the flat out for at least six months at a rent that's at or above the market rate.

To plug one potential loophole, the government says it will still consider flats sold to any entity linked to the developer to be new flats, and therefore subject to the tax.

The tax will be double the property's rateable value, and will apply until it is sold or let out.

The administration said it had noted an increase in the number of unsold flats, at a time when home prices in the city had grown rapidly. There were some 3,000 such homes in 2013, compared to 9,000 last year.

The tax will not apply to non-residential property and will also not apply to flats that are left vacant after being sold.

The government will put the proposal to the Legislative Council during this legislative year.