Transaction Costs Overview: From Deposit to Closing

Buying a property in Hong Kong involves more than just the purchase price. The total cash outlay from the moment you sign a preliminary agreement to the day you receive the keys includes a series of mandatory and optional costs that can add 10% to 15% to the headline figure. Understanding these costs before you start viewing flats is essential to avoid being caught short at the last minute.

This article walks through every stage of a typical Hong Kong property transaction, from the initial deposit through to the final closing. It covers the amounts you need to pay, who receives them, and when they fall due. All figures are in Hong Kong dollars (HKD) unless otherwise stated. The information applies to residential property transactions in Hong Kong, with a focus on the secondary market, though many costs also apply to new developments.

Deposit Structure: The Initial and Second Deposits

The deposit process in Hong Kong is split into two stages: the initial deposit and the second (or final) deposit. Together they typically total 10% of the agreed purchase price, though the split can vary.

Initial Deposit (臨時訂金)

When you make an offer through an estate agent and the seller accepts, you sign a Preliminary Agreement for Sale and Purchase (臨時買賣合約). At this point you pay an initial deposit, usually 3% to 5% of the purchase price. The exact amount is negotiable between buyer and seller, but 3% is the most common figure in the secondary market.

The initial deposit is held by the estate agent’s solicitor or by the agent themselves in a client account. It is not released to the seller until the formal agreement is signed. If you withdraw from the deal after signing the preliminary agreement but before the formal agreement, you forfeit this deposit. The seller can also claim damages for breach of contract.

For a property priced at HKD 8 million, a 3% initial deposit equals HKD 240,000. This cash must be available immediately, usually as a certified cheque or bank draft.

Second Deposit (大訂)

Within 5 to 14 days after signing the preliminary agreement, both parties sign the formal Agreement for Sale and Purchase (正式買賣合約). At this signing, you pay the second deposit. The combined total of the initial and second deposits is typically 10% of the purchase price. So if you paid 3% initially, you pay another 7% at this stage.

The second deposit is held by the seller’s solicitor as stakeholder, meaning neither party can access it until completion. If you fail to complete the purchase, the seller can keep the entire 10% deposit as liquidated damages, plus any further losses.

Some sellers may accept a lower total deposit, especially in a slow market. A 5% total deposit is not unheard of, but 10% is the standard. For a HKD 8 million property, the second deposit would be HKD 560,000 (7% of 8 million).

Stamp Duties: The Largest Additional Cost

Stamp duty is the single largest transaction cost after the purchase price itself. Hong Kong imposes several types of stamp duty on property transactions. The amount depends on the property value, the buyer’s residency status, and whether the buyer already owns property in Hong Kong.

Ad Valorem Stamp Duty (AVD)

Ad Valorem Stamp Duty (AVD) is a sliding scale tax on the purchase price or market value, whichever is higher. The rates are set by the Inland Revenue Department (IRD).

For Hong Kong permanent residents buying their first residential property, the AVD rates as of 2025 are:

• Up to HKD 3 million: HKD 100
• HKD 3,000,001 to HKD 4,500,000: 1.5% of the excess over HKD 3 million, plus HKD 100
• HKD 4,500,001 to HKD 6 million: 2.25% of the excess over HKD 4.5 million, plus HKD 22,600
• HKD 6,000,001 to HKD 9 million: 3% of the excess over HKD 6 million, plus HKD 56,350
• HKD 9,000,001 to HKD 20 million: 3.75% of the excess over HKD 9 million, plus HKD 146,350
• Above HKD 20 million: 4.25% of the excess over HKD 20 million, plus HKD 558,850

For a property priced at HKD 8 million, the AVD for a first-time buyer would be approximately HKD 116,350 (3% of the excess over HKD 6 million plus HKD 56,350).

If you already own a residential property in Hong Kong, you pay a flat AVD rate of 7.5% on the purchase price, regardless of value. For HKD 8 million, that is HKD 600,000.

Buyer’s Stamp Duty (BSD)

Buyer’s Stamp Duty (BSD) applies to non-permanent residents and foreign buyers. It is a flat 7.5% on the purchase price. This is in addition to the AVD. So a non-permanent resident buying a HKD 8 million property as a first property would pay AVD of HKD 116,350 plus BSD of HKD 600,000, total stamp duty of HKD 716,350.

Hong Kong permanent residents are exempt from BSD, regardless of how many properties they own.

Special Stamp Duty (SSD)

Special Stamp Duty (SSD) applies to properties resold within a short holding period. It is paid by the seller, not the buyer, but it can affect pricing and negotiation. The rates are:

• Sold within 6 months: 20% of the purchase price
• Sold between 6 and 12 months: 15%
• Sold between 12 and 24 months: 10%

SSD was introduced to discourage short-term speculation. Most buyers do not pay SSD directly, but if you are buying from a seller who is liable for SSD, they may try to pass the cost to you via a higher price.

For a detailed breakdown of all stamp duty categories, see Stamp Duty Categories Explained.

Legal Fees and Solicitor Costs

Every property transaction in Hong Kong requires a solicitor. You cannot complete the purchase without one. The solicitor handles the title search, drafts and reviews the agreements, handles the deposit, and registers the transfer at the Land Registry.

Standard Legal Fees

Legal fees for a standard residential property purchase in Hong Kong range from HKD 7,000 to HKD 15,000, depending on the complexity of the transaction and the size of the firm. Larger firms with a conveyancing department may charge HKD 10,000 to HKD 15,000. Smaller sole practitioners may charge HKD 7,000 to HKD 10,000.

These fees usually include:

• Title search and report
• Drafting and reviewing the Preliminary Agreement and Formal Agreement
• Handling the deposit and completion monies
• Preparing the assignment (transfer deed)
• Registering the transfer at the Land Registry
• Stamping the documents

Additional charges may apply if the property is a village house, if there are multiple owners, or if the title has complications. Always ask for a written quotation before engaging a solicitor.

Disbursements

In addition to the solicitor’s fee, you must pay disbursements. These are out-of-pocket costs that the solicitor pays on your behalf and then charges back to you. Common disbursements include:

• Land Registry search fees: HKD 25 to HKD 100 per search
• Registration fee for the assignment: HKD 210 (as of 2025)
• Certified copy fees: HKD 5 to HKD 20 per page
• Postage and courier: HKD 50 to HKD 200

Total disbursements usually come to HKD 500 to HKD 1,500.

Estate Agent Commission

Estate agent commission is payable by both the buyer and the seller. The standard rate in Hong Kong is 1% of the purchase price for the buyer and 1% for the seller. However, this is negotiable, especially in a slow market or for high-value properties.

For a HKD 8 million property, the buyer’s commission is HKD 80,000. This is due on completion, though some agents may ask for a portion earlier. The commission is paid to the estate agency, not to the individual agent. The agency then splits the commission with the agent according to their internal policy.

Large agencies such as Centaline Property Agency Limited, Midland Realty, and Ricacorp Properties all charge the standard 1% for buyers, though discounts are possible. Online agencies like Spacious or 28Hse may charge lower fees, but they are less common for full-service transactions.

If you are buying a new development directly from a developer, you do not pay agent commission. The developer pays the agent if you are introduced by one. If you buy directly without an agent, you save the commission entirely.

Mortgage Related Costs

If you need a mortgage, there are several costs associated with arranging and servicing the loan. These are paid at different stages of the process.

Mortgage Application Fee

Most banks in Hong Kong charge a mortgage application fee, typically HKD 1,000 to HKD 3,000. This covers the cost of credit checks and property valuation. The fee is non-refundable even if the application is rejected. Some banks waive the fee if you have a good relationship with them or if you apply through a mortgage broker.

Valuation Fee

The bank will conduct a property valuation to determine the loan amount. The valuation fee is usually HKD 1,500 to HKD 3,000, depending on the property type and location. For a standard flat in an urban area, expect HKD 2,000. For a luxury property or a village house, the fee can be higher.

If you use a mortgage broker, they often arrange the valuation for free as part of their service.

Legal Fee for Mortgage

If you take out a mortgage, your solicitor must also prepare the mortgage deed and register it at the Land Registry. This adds HKD 2,000 to HKD 5,000 to your legal fees. Some solicitors include this in their standard conveyancing package. Check before you engage them.

Mortgage Insurance

If your loan-to-value (LTV) ratio exceeds 60%, the bank will require you to take out mortgage insurance. This is a one-time premium paid upfront, though some insurers allow you to spread it over the loan term. The premium depends on the loan amount and the LTV ratio.

For a 90% LTV mortgage on a HKD 8 million property (loan of HKD 7.2 million), the mortgage insurance premium is approximately 2% to 3% of the loan amount, or HKD 144,000 to HKD 216,000. This is a significant cost that many first-time buyers overlook.

Mortgage insurance is provided by the Hong Kong Mortgage Corporation (HKMC) or private insurers like AIG and QBE. The HKMC’s Mortgage Insurance Programme covers loans up to 90% LTV for properties up to HKD 10 million.

Management Fees and Other Recurring Costs

While not strictly transaction costs, management fees and other recurring costs must be factored into your budget from the start. These are ongoing expenses that begin as soon as you take ownership.

Management Fee Deposit

When you complete the purchase, the property’s owners’ corporation or management company will require you to pay a management fee deposit. This is typically equal to 2 to 3 months of management fees. For a standard 500 square foot flat in a mid-range estate, management fees are HKD 3 to HKD 5 per square foot per month. So a deposit of HKD 3,000 to HKD 7,500 is common.

You also pay the management fee for the month of completion on a pro-rata basis.

Government Rent

Most residential properties in Hong Kong are held on a government lease. The lease requires payment of government rent, which is calculated at 3% of the rateable value of the property. The rateable value is assessed by the Rating and Valuation Department. For a typical flat, government rent is HKD 50 to HKD 300 per quarter. It is paid to the government every three months.

For more details on ongoing costs, see Management Fees and Other Recurring Costs.

Miscellaneous Costs and Contingencies

Several smaller costs arise during the transaction that are easy to forget. These include:

• Bank draft fees: HKD 50 to HKD 200 per draft. You will need multiple drafts for deposits, stamp duty, and completion monies.
• Property inspection: If you hire a professional inspector to check for defects, expect to pay HKD 2,000 to HKD 5,000.
• Survey fee: If you need a boundary survey or a structural survey, costs start at HKD 5,000.
• Moving costs: Hiring a moving company in Hong Kong costs HKD 2,000 to HKD 10,000 depending on the volume of goods and distance.
• Utility deposits: CLP Power and Hongkong Electric require a deposit of HKD 1,000 to HKD 3,000. Towngas requires a deposit of HKD 500 to HKD 1,500.

It is wise to set aside a contingency fund of HKD 20,000 to HKD 50,000 to cover unexpected costs.

Total Cost Estimate for a HKD 8 Million Property

To give you a concrete picture, here is a typical cost breakdown for a first-time Hong Kong permanent resident buying a HKD 8 million property in the secondary market with a 90% mortgage.

The total upfront cash needed, excluding the purchase price itself, is approximately HKD 1.2 million. This is 15% of the purchase price. If you are not a first-time buyer or not a permanent resident, the stamp duty alone could add another HKD 500,000 or more.

Timing of Payments: When Each Cost Falls Due

Knowing when each cost must be paid helps you plan your cash flow.

• Day of preliminary agreement: Initial deposit (3% to 5%)
• 5 to 14 days later: Second deposit (balance to 10%)
• Before completion: Stamp duty (paid to solicitor, who stamps the documents)
• Completion day: Balance of purchase price, agent commission, legal fees, management fee deposit, mortgage insurance premium
• After completion: Utility deposits, moving costs

Stamp duty is usually paid by your solicitor on your behalf on or before the completion date. You must provide the funds to your solicitor at least two working days before completion.

Ways to Reduce Transaction Costs

While some costs are fixed, others can be reduced or avoided.

• Negotiate agent commission: Ask for a discount, especially if you are buying a high-value property or if the market is slow.
• Shop around for legal fees: Get quotes from at least three solicitors. Small firms often charge less.
• Use a mortgage broker: They can help you find a bank that waives the application and valuation fees.
• Buy direct from developer: No agent commission, and developers often offer stamp duty subsidies or cash rebates.
• Consider a lower LTV: If you can put down 40% or more, you avoid mortgage insurance entirely.
• Time your purchase: If you are not a permanent resident, consider waiting until you obtain permanent residency to avoid BSD.

For a broader overview of the buying process, see The Complete Guide to Buying Property in Hong Kong.

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• The Complete Guide to Buying Property in Hong Kong
• Stamp Duty Categories Explained
• Management Fees and Other Recurring Costs
• New Developments vs Secondhand
• Understanding Leasehold and Freehold
• Market Trends and Cycles