Conveyancing, mortgages and property tax

What happens between the provisional agreement and completion, how mortgages work and how much a bank may lend, and the taxes on property: stamp duty, property tax, Government rent, rates and profits tax. Expect stamp duty and property tax sums that you must do by hand, because calculators are not allowed in the exam.

Part I · Stand-alone questions9 min read9 sections

Checked against the Conveyancing and Property Ordinance (Cap. 219), ss.13, 13A and 44; Stamp Duty Ordinance (Cap. 117) and IRD Stamp Duty Rates Table IRSD123 (5/2026); IRD Stamp Office Interpretation & Practice Notes No. 1 (Revised), paras 30 to 32; IRD press releases of 26 Feb 2025 and 4 Mar 2026; info.gov.hk release of 28 Feb 2024; HKMA press release of 16 Oct 2024; HKMC Insurance Mortgage Insurance Programme page; RVD pages on rates, progressive rating and Government rent; Government Rent (Assessment and Collection) Ordinance (Cap. 515); IRD property tax and profits tax pages; EAA, A Study Guide to Estate Agency Law and Practice, Part 3, paras 60 to 108; checked 11 Oct 2026.

Must-know for the exam

Residential AVD for instruments on or after 26 Feb 2025: HK$100 on consideration up to HK$4,000,000 (was HK$3,000,000), with a 20% marginal band up to HK$4,323,780.
From 26 Feb 2026, residential consideration over HK$100,000,000 pays AVD at 6.5% (was 4.25%); non-residential (Scale 3) stays at a 4.25% top rate.
SSD, BSD and NRSD were abolished for residential instruments executed on or after 28 Feb 2024; every buyer now pays the same AVD.
Agreements for sale are stamped within 30 days. PASP replaced within 14 days by a formal agreement on the same terms: only the formal agreement pays AVD.
Buyer, seller and anyone using the instrument are jointly and severally liable for stamp duty. Late stamping: up to 2x (1 month), 4x (2 months), otherwise 10x.
HKMA, PASPs from 16 Oct 2024: maximum LTV 70% and DSR 50% for all property. The HKMC Mortgage Insurance Programme can lift LTV to 80% or 90%.
Property tax: 15% of net assessable value, which is rent less irrecoverable rent and rates paid by the owner, then less a 20% statutory allowance.
Rates from 1 Jan 2025: domestic tenements pay 5% on the first HK$550,000 of rateable value, 8% on the next HK$250,000 and 12% above HK$800,000.
Government rent under Cap. 515 is 3% of rateable value, payable by the owner. Hong Kong has no capital gains tax; property trading profits pay profits tax.
Unless the contract says otherwise, the purchaser may require title going back at least 15 years from a good root (Cap. 219, s.13).

On this page · 9 sections

Traps that cost marks

Treating the PASP as a mere step that either side can abandon.
Mixing up the formal agreement (vendor's solicitors draft) with the assignment (purchaser's solicitors draft).
Counting from the wrong date.
Applying the vendor-default compensation clause from the PASP to a requisition cancellation.
Thinking the purchaser can always demand the chain back to the Government lease.
Thinking risk stays with the vendor until completion.
Thinking a short delay is harmless.
Assuming utility deposits pass with the flat like the management fee deposit.

Why this matters in the exam

This topic has the most calculations in Part I: stamp duty on a sale or a lease, a loan amount from a loan-to-value ratio, property tax on a let flat, rates from a rateable value. None needs a calculator if you know the rule, and each is a sure 2 marks. The exam paper prints a stamp duty table; the sample in the August 2026 handbook still shows the scale used before 26 Feb 2025, so use the table printed on your paper.

The conveyancing questions test who does what (agent, vendor's solicitors, purchaser's solicitors), what the usual formal agreement says, and when deposits should be held by solicitors as stakeholders.

From provisional agreement to completion

•Provisional agreement (PASP): prepared by the agent and binding once signed. If the parties never agree a formal agreement, the PASP stays the contract, and neither side can add terms (DH Shuttlecocks Ltd v Keung Shiu Tang [1993] 2 HKC 600).
•Initial deposit: usually 1% to 5% of the price on signing the PASP. With the further deposit, paid on signing the formal agreement (usually within 14 days), it usually totals 10%.
•Default: if the purchaser defaults, the initial deposit is forfeited; if the vendor defaults, he usually returns the deposit plus an equal sum.
•Formal agreement: drafted by the vendor's solicitors. Assignment: drafted by the purchaser's solicitors, who also stamp and register after completion.
•Completion: the purchaser's solicitors pay against the vendor's solicitors' undertakings to hand over the keys, the signed assignment and the release of the vendor's mortgage. The deeds then go to the purchaser's bank (or the purchaser if there is no mortgage).

Where the vendor's mortgage exceeds the price, or the property may be in negative equity, advise that deposits be held by solicitors as stakeholders until completion (Circular No. 05-07 (CR); Code of Ethics para 3.5.1).

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Salespersons Qualifying Examination