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Confused about home purchase? DBS have some tips for you


Know about buying a property


  • Make an on-site visit to get to know the neighbourhood:
    No matter it is a pre-sale or an existing property, you should make an on-site visit to check out the public facilities in place, such as railway stations and other public transport interchanges, schools, parks, public car parks, hospitals, waste collection points and cemeteries, etc. Watch out for any noise or other environmental pollution threats.
    Pre-sale property – The sales brochure shall include the details of all public facilities in the surrounding area and their anticipated completion dates, as well as the plans for and uses of different sections of the development. If in doubt, you should ask the developer for further details.

  • Find out the future development plans of the district:
    For details about the zone planning and the future development of the major road system, you may obtain the relevant information from the following channels:
     
    1. The Outline Zoning Plan or the Development Permission Area Plan for the relevant district at the Planning Enquiry Counters of the Planning Department (17/F North Point Government Offices, 333 Java Road, North Point, or 14/F Sha Tin Government Offices, 1 Sheung Wo Che Road, Sha Tin);
    2. The Outline Zoning Plan for the relevant district at the Lands Department (23/F North Point Government Offices, 333 Java Road, North Point); or
    3. Visit the Statutory Planning Portal

  • Government Lease (Land Grant):
    Use restrictions of the land are laid down.
  • Occupation Permit and the Deed of Mutual Covenant:
    Use restrictions of the flat are laid down. A property for non-domestic purposes may not be used for domestic purposes, and vice versa.

    1. First-hand property:
      The sales brochure should set out the restrictions on the use of the property. If in doubt, you should ask the developer for further details.
    2. Second-hand property:
      Before signing a provisional or formal sale and purchase agreement, carefully inspect the condition of the property to see:
      • If there are any additions or alterations to the structure of the property.
      • If the property occupies any common area.


Before signing a sale and purchase agreement, you should cousult your solicitor about the terms for renewing the Government Lease (Land Grant).
  • Renewable Government Leases:
    They may be renewed without payment of any land premium, but are subject to payment of a new yearly government rent, which is equivalent to 3% of the rateable value of the property for the year concerned.
  • Government Leases for the New Territories:
    Those Government Leases expiring between the effective date of the Sino-British Joint Declaration (i.e. 27 May 1985) and 30 June 1997 with no right of renewal (i.e. most Government Leases in the New Territories) may be extended to no later than 30 June 2047, subject to payment of a yearly government rent equivalent to 3% of the rateable value of the property for the year concerned upon the commencement date of the extended term. Important: Given that a property owner is liable to pay all government rent, including any accumulated balance in arrears, you should engage a solicitor to seek professional advice on matters relating to such payments (including the respective legal obligations of the seller and the buyer in relation to the amount payable, accumulated balance in arrears or advance payment of government rent). You may also check with the Lands Department or the Rating and Valuation Department about any outstanding government rent.

  • Gross floor area:
    This normally refers to the sum of the property's saleable area, its apportioned share of the common areas and any other area which is for the exclusive use of the buyer.  
  • Saleable area:
    commonly called "usable area".
     
    1. First-hand property: Saleable area means the floor area of the residential property, which includes the floor area of (i) a balcony, (ii) a utility platform and (iii) a verandah so long as it forms part of the residential property. However, it excludes an air-conditioning plant room, a bay window, a cockloft, a flat roof, a garden, a parking space, a roof, a stairhood, a terrace or a yard even it forms part of the residential property.
    2. Second-hand property: Check out the "saleable area" with the property agent and ask for the details of the calculation or take onsite measurement on your own to make sure if the bay windows, balcony and air conditioner spaces are included.
  • 9 key points for a provisional agreement 

    The provisional agreement for sale and purchase is a valid and legally binding contract. Upon reaching an agreement on the property price and other terms and conditions and confirmation of the seller’s capacity as the legal owner of the property, the seller and the buyer may sign the provisional agreement, which shall include the following basic elements:     
    1. Date of the agreement
    2. Names, Identity Card numbers, correspondence addresses and telephone numbers of the seller and the buyer.
    3. The detailed address of the subject property and whether it will be handed over with vacant possession. A list of the furniture, electrical appliances and fixtures (if any) included in the sale should be set out as well.
    4. Agreed price of the property.
    5. Payment schedule of the provisional deposit, formal deposit and the remaining balance.
    6. Completion date.
    7. The apportionment of the legal fees between the parties.
    8. The amount of brokerage commission, which party shall pay and when.
    9. The compensation for one party upon breach of contract by the other party.
  • 8 key points for a formal agreement      
    1. It is your solicitor, not a paralegal or legal clerk, who should explain to you the terms and conditions of the formal sale and purchase agreement.
    2. If furniture, electrical appliances and fixtures are included in the sale, they should be specified in detail in the agreement and shall be inspected carefully upon handover.
    3. Upon signing the formal agreement, the formal deposit, together with the stamp duty, is payable to the solicitor, who will redirect the latter to the Inland Revenue Department.
    4. Upon signing the formal agreement, the title still remains with the seller, who is liable for the rates and government rent, as well as water and electricity bills until the handover. Nevertheless, the risk of any damage to the property will be borne by the buyer. Hence, buyers of second-hand properties should take out home insurance policies for their properties as soon as possible.
    5. Within one week after the formal agreement is signed, you should check with your solicitor if the stamp duty has been paid in order to protect your own interests.
    6. On the completion date, you should inspect the property to see that it is to your satisfaction before paying the remaining balance of the property price. If any condition is found to be inconsistent with the agreement, such as any variations in the furniture or electrical appliances from what is specified therein, a detailed record shall be made for the solicitor to follow up.
    7. If you are fully satisfied after the inspection, the Deed of Assignment should be signed and the remaining balance of the consideration (normally equivalent to 90% of the property price) should be paid on the completion date. If a mortgage is to be drawn, payment of the remaining balance to the seller will be handled by the solicitor authorised by the bank.
    8. The transaction will be completed by the seller handing over the keys to the solicitor or property agent for delivery to the buyer.
Important:
  1. Solicitor: 
    You should seek professional legal advice before signing the provisional and formal agreements. Generally speaking, the seller and the buyer should engage different solicitors to fully protect their respective interests and avoid any conflict of interest. However, under certain circumstances, such as the sale and purchase of a presale property or the first sale of a completed property, the developer may require the buyer to engage the same solicitor. As such, before buying a property, you should check with the developer to see if you can engage your own solicitor.
  2. Deposits: 
    According to market practice, the buyer is required to pay a provisional deposit, normally equivalent to 3%-5% of the property price, upon signing the provisional agreement. The sum of the provisional and formal deposits is normally equal to 10% of the property price, and the formal deposit is normally payable when the formal agreement is signed.
1. Sign the provisional agreement for sale and purchase
(applicant may request from the bank a verbal appraisal of the property value in advance)
2. Apply for a mortgage loan from the bank
(ask for a closing period of not less than 45 days if applying for a mortgage loan which Loan-to-value ratio above 60%, to ensure sufficient time to apply the Mortgage Insurance from The Hong Kong Mortgage Corporation Limited)
3. Provide the necessary documents to the bank
(including the provisional agreement for sale and purchase, Identity Card copy and income proof)
4. Processing of the mortgage loan application by the bank
5. Upon approval, the bank will issue to the applicant a Facility Letter, which will set out the mortgage interest rate and other terms and conditions
6. The solicitor who acts on behalf of the bank will prepare the Deed of Mortgage to be signed by the applicant
(a joint solicitor may be used to represent both the bank and the applicant)
7. The solicitor will arrange with the bank for the drawdown of the loan to complete the transaction

Inspection of first-hand properties

  • Check list for the main entrance
    • Is the door properly constructed?
    • Is there any sign of a pest problem?
    • Is the gap between the door and its frame too wide?
    • Is the door attached properly to the door frame?
    • Is the doorbell working properly?
    • Is the buzzer working properly? 
       
  • Checklist for the living room/bedrooms
    • Is the ceiling free from defects?
    • Is there any sign of water leaks in the ceiling?
    • Are the walls free from defects?
    • Are there any air bubbles or water leaks in the walls?
    • Are there any cracks in the flooring?
    • Are the flooring gaps too big?
    • Is there any gap under the flooring?
    • Is there any cracking and chipping of the skirting boards?
    • Are there any water leaks in the bay windows?
    • Can the windows be opened and closed without a glitch?
    • Are there any broken panes in the windows?
    • Are the window frames and glass installed properly?
    • Any blocked or cracked sockets? Is the electricity supply normal?
       
  • Checklist for the kitchen
    • Are the kitchen cabinets free from defects?
    • Can the cabinet doors be opened and closed without a glitch?
    • Are the gas pipes properly installed?
    • Are there any signs of gas leaks?
    • Is the cooking stove free from defects?
    • Are the readings of the gas, water and electricity meters at zero?
    • Is the drainage outlet properly angled? Is there any sign of blockage?
    • Any leaks in the water pipes?
       
  • Checklist for the bathroom
    • Any water leaks in the ceiling?
    • Is the drainage outlet properly angled? Is there any sign of blockage?
    • Is the sink/bathtub free from blockage?

Inspection of second-hand properties

  • Pay an onsite visit to check if there are any signs of water leaks in the ceiling, bay windows and walls, and if there is any loose flooring. Do enquire if there has been any incident of water leaks.
  • Check the electrical wiring and switches, water pipes, sewage pipes, bathtub and toilet bowl to see if they are working properly. If there is any sign of wear and tear in the wires or pipes, find out from the seller when they were last repaired or replaced.

Property maintenance

  1. Slopes:
    If there is any slope in the surrounding area, read the sales brochure / Government Lease / Deed of Mutual Covenant carefully to find out who is responsible for maintenance. The sales brochure must also include a plan of such slope(s).
  2. First-hand property:
    There is usually a free maintenance period of six months to one year.
  3. Second-hand property:
    Normally sold on an "as-is"; basis without a free maintenance period. If necessary, engage professional support to inspect and assess the property's condition before making any decision to buy. Also check out if the housing development or building has any repairs and maintenance plan in the near future, such as replacing electric installations or lift cables, painting external walls, maintaining slope(s), etc. If yes, find out whether the cost will be borne by the buyer/seller.

When everything is alright, you can get ready for moving into your new home. You need to apply for water and electricity supplies, telephone service, broadband connection, mail redirection and so on. So, for your easy reference, below is a table of the contact information of the major residential service entities in Hong Kong:

Commercial / Public service

Enquiry hotline

Website

CLP2678 2678www.clp.com.hk
Hong Kong Electric2887 3411www.heh.com
Towngas2880 6988www.towngas.com
Water Supplies Department2824 5000www.wsd.gov.hk
PCCW1000www.pccw.com
Hutchison Global Communications3166 3333www.hgc.com.hk
New World Telecommunications1239www.newworldtel.com
Hongkong Post2921 2222www.hongkongpost.com
i-cable1832 832www.i-cable.com
Hong Kong Broadband128 100www.hkbn.net
Netvigator1000www.netvigator.com
NOW TV2888 1888www.now.com.hk
Rating and Valuation Department2152 0111www.rvd.gov.hk

 

Disclaimer: The information on this web-page is for reference only. They are not intended to be and are not professional or legal advice. Browsers of this web-page ought to seek appropriate professional advice in accordance with their own circumstances and needs. DBS Bank (Hong Kong) Limited (the "Bank") does not give any warranty on any of the information (including but without limitation to their accuracy and completeness). The Bank shall not be legally liable for any direct or indirect loss of any person arising from any information being misleading, inaccurate or incomplete or any use of any information by any person.

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