Given the introduction of the stamp duty in November and low LTV ratios offered by banks, the hurdles associated with obtaining adequate financing have led to a slump in demand for second-hand properties in Hong Kong. Cooling measures notwithstanding, with the secondary market constituting the lion’s share of housing units in Hong Kong, it is in your interest as a potential home buyer, to consider second-hand property. Generally better placed in terms of location, convenience and size, if you are looking to buy within the second-hand sector, the below criteria presents important points of consideration which will better inform your buying decision.
As a starting point, look to your ultimate reason for buying. Be it as a long term investment, a place of residence or a resale property, your use of the property will serve as a filter for considerations such as neighborhood, connectivity, recreational spots and proximity to educational institutions. In the case of resale property, opting for an established locality or even an undervalued up and coming area may net you a higher ROI in the future, especially if the property or the location has desirable features which are easy to sell on the market.
Referring to statutory guidelines provided by the Hong Kong Buildings Department, an owner of a property is responsible for the upkeep and repair of the property in their own premise as well as common areas. Failure to meet such requirements could leave the owner liable to a conviction under the Building Ordinance.
As a potential buyer, given the age of the property, it is imperative that you pay close attention to possible defects in the property during your viewing both in the private and common areas. Signs to look out for include:
- Unauthorized building works
- Non-structural cracks in the walls
- Spalling of concrete, structural cracks or defects in the external building wall
- Defects in the private premises i.e. condition of doors and windows, signs of a damp problem, electrical wiring, and plumbing
- Defects in common areas i.e. internal water leaks, tiling problems, security and lack of fire safety measures
In fact, owners of buildings aged 30 years or above are required to appoint a Registered Inspector and undertake prescribed repairs when served with a statutory notice.
It is important to note that although alteration and addition works are permitted by the Buildings Department (so long as prior approval is obtained) and common renovation works are exempted under the Building Ordinance, as a potential buyer you should consult the Land Registry and the Buildings Department in case features of the property appear to be illegal structures.
In assuming ownership of the property, you will be responsible for all aspects relating to the maintenance of the property. Therefore, it is crucial that you exercise due diligence in making sure that the property is in good condition, otherwise you may incur onerous charges.
Second-hand properties may not include all modern amenities. As a buyer, if you have particular features in mind such as broadband network coverage, a heating system, intercom and Cable TV access you should check with service providers before committing to the purchase of the property. You should also clarify with the existing homeowner as to what furnishings are included in the purchase price. Moreover, you should ask for document verification and look to the property title to establish ownership of the property.