Is owning property in the joint names with your family member preferred?

30-11-2016

Traditionally, couples used to own property as joint tenants. In recent years, due to a change in stamp duty rules and mortgage lending requirements, couples may purchase a property and take out a mortgage loan separately to make best use of the rules in their favour.

With effect from February 2013, double stamp duty (DSD) will apply to a Hong Kong permanent resident buyer who already owns a residential property in Hong Kong at the time of acquisition of a second residential property. Conversely, if that Hong Kong permanent resident buyer does not own any residential property in Hong Kong, he will be subject to the pre-2013 ad valorem stamp duty rates, which is half of the DSD.

Thus if a Hong Kong permanent resident purchases a property at $6million, DSD of $360,000 will be payable if he already owns another property. Otherwise, he only needs to pay $180,000 ad valorem stamp duty.

If a couple wishes to buy a $6 million property but only one of them is registered as the sole beneficial owner, the other person can still buy a second property in her sole name and still enjoy the lower ad valorem stamp duty. The couple separately will own two properties in their separate names, each paying the lower ad valorem stamp duty.

When applying for a mortgage loan, in calculating the debt servicing ratio for the second property, assuming the couple has co-owned the first property, the repayment under the first mortgage will be aggregated in the overall debt exposure of the couple in the second property mortgage application.

Therefore, it may be beneficial to the couple to separate the property ownership of multiple properties rather than holding the properties in their joint names.

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