Billionaire Cecil Chao experiments with co-living to avoid Hong Kong's looming vacancy tax

By Lam Ka-sing kasing.lam@scmp.com / https://www.scmp.com/property/hong-kong-china/article/3035385/billionaire-cecil-chao-experiments-co-living-avoid-hong?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | November 5, 2019 11:01 AM SGT
Billionaire Cecil Chao Sze-tsung's Cheuk Nang (Holdings) is offering seven flats at its One Kowloon Peak luxury residential project as co-living units in a bid to avoid vacancy tax amid downbeat sentiment.
"The penalty is quite high if you do not lease them. If it [vacancy tax] is really implemented, the impact on Hong Kong's developers will be very big," said Chao, 83, chairman of Hong Kong-listed Cheuk Nang in an exclusive interview with the Post. "As a developer, we definitely oppose it, especially when the market is not really booming."
Out of 49 units in the project at Tsuen Wan West, only 13 have been sold since the initial launch in 2015, while most of them have been leased. The unsold flats will be subject to a vacancy tax if they are not leased.
"If the market is good, of course we would like to sell them," said Chao, adding that since sales were slowing, leasing was a safer option, as developers have been hit by the double whammy of more than five months of anti-government protests and the US-China trade war.
Interior of One Kowloon Peak in Tsuen Wan, which is subdivided for lease. Photo: Edward Wong alt=Interior of One Kowloon Peak in Tsuen Wan, which is subdivided for lease. Photo: Edward Wong
The government gazetted the vacancy tax or Special Rates proposal in early September with a view to pass the bill into law before the end of the year. The new tax, which is set at two times the rateable value of a property " currently around 5 per cent of the property's price " will be levied on all new units which have been left unsold one year after being issued with their occupation permits or have not been leased out for more than six months over the same period.
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