Hong Kong to close trust loophole in property ownership

Will disallow non-permanent residents from exploiting loophole to own property.

Implementation arrangements are in place for the “Hong Kong Property for Hong Kong People” measure to prevent an alleged loophole that allows purchasers who are not Hong Kong Permanent Residents to hold units through trusts.

The Lands Department said that under the arrangements, leases for the two sites will specify that purchasers (the developer and each subsequent owner) will have to apply for prior written consent from the Director of Lands before alienation of the residential units built thereon throughout a 30-year period from the date of the land grant.

Apart from the eligibility criteria, the conditions in the consent to sale also require the purchaser to buy the property, and take up the assignment of the property, in their own name and as the beneficial owner of it.

The purchaser must make a statutory declaration that they are the beneficial owner of the property and that the declaration should be registered with the Land Registry before assignment.

Purchasers wilfully contravening the requirements of the consent and making a false statutory declaration will have to bear the following consequences.

Under section 36 of the Crimes Ordinance, anyone who knowingly and wilfully makes a statement false in a statutory declaration is guilty of an offence and liable to two-years’ jail and a fine.

In addition, the alienation of the flat in connection with the false statutory declaration made will be considered as a transaction that breaches the land lease conditions. The government has the right to take lease enforcement action including re-entry action in respect of the flat.