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Buying Hong Kong Apartment Buying Tips Part 2/2: Making an Offer and Signing a Provisional Agreement

Before Making an Offer

Bank valuation – Bank valuation is what the property is worth to the bank, and thus ultimately determines the size of the mortgage that you can borrow. HSBC and Bank of China provide online valuations but they may not be indicative, when needed, you can call any bank to find their valuations on a property for free. Banks use independent surveyors to value a property; all you need to do is provide them the exact address, preferably the address that the property is registered under in the Hong Kong Land Registry.

Costs associated with occupation, such as management fees and quarterly rates. These are ongoing costs which should be considered into your budget.

Building age of the property and the remaining lease term with the Hong Kong SAR. In Hong Kong, all existing land belongs to the government, when buying property in Hong Kong the purchase is actually for the existing lease.

Building Orders. Building orders require the owner to rectify an infringement with the Building’s Authority such as an existence of illegal structures or alterations. The presence of a building order may render the title of the property defective and may be costly to rectify.

Slope maintenance, if the property is on a slope the owner of the property may need to contribute to the cost of maintaining the integrity of that slope.

Be familiar with the Outline Zoning Plan (OZP) from the Town Planning Board which shows the land uses, major road systems proposed and nearby public facilities. From the Town Planning Board, a request can also be made for the Development Permission Area Plans for a particular district.

Before Signing a Provisional Agreement

Before signing a provisional agreement for the sale and purchase of the property, the agent should have verified and provided you with the latest information on the title of the property.

Obtain a copy and understand the Land Search provided by the Land Registry of Hong Kong, a document that lists the property’s owner, as well as any statutory orders, outstanding mortgages and other encumbrances affecting the property such as Building Orders as noted above.

If there is doubt about the owner’s ability to repay the loan for the redemption of the property, for example the selling price is lower than what the owner paid for the property. Make it a requirement that deposits are stake-held by solicitors.

Make sure you understand all the terms present in the agreement which should be explained to you by the agent and be aware of the amount of the deposit and when the remaining balance should be paid. In general practise, the total deposit is 10% of the purchase price, 3-5% is paid upon signing of the provisional agreement and the remaining balance in 2 weeks time.

The agreement for sale and purchase is a valid and legally binding contract. It is prudent to seek independent legal advice before entering into any agreement.

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