The average cost of a prime, two-bedroom apartment in Knightsbridge, is estimated at £1.69m, up 86% against 2009. A comparable two-bedroom apartment in an upmarket area on Hong Kong Island is estimated at HK$35m (£2.69m). According to the Corcoran Report the average price of a two-bedroom condo in a prime area of New York is $2.27m (£1.36m). Property prices, however, are not the whole picture.
London. Stamp duty of 5% plus legal fees and a Land Registry fee add 5.8% taking the total cost of purchase of a £1.69m property to around £1.78m.
Hong Kong. A permanent Hong Kong resident pays a 4.25% rate of stamp duty on properties worth over HK$21.73m (£1.67m). That gives a total purchase cost (for HK resident) of HK$36.86m after taxes for the two-bedroom property cited above. Non-HK residents, however, pay a far higher stamp duty rate – currently 8.5% for the top band of property. Since 2012, non-HK residents have also had to pay buyer’s stamp duty (BSD) charged at 15% of the property’s market value. A non-resident may, therefore, face additional costs of up to 23.5% of the purchase price.
New York. Buyers pay a 1% New York State ‘mansion tax’ on the purchase for homes of $1m-plus. However, the equivalent transfer tax is paid by the seller rather than the buyer (see below ‘cost of selling’).
New York has the highest ownership costs due to its monthly real estate tax. A two-bedroom condo worth £1.36m in downtown Manhattan would cost the owner £4,436 a year, or 0.3% of the property’s value, compared with £2,134 (0.13%) of annual council tax in prime London, and £2,071 (0.08%) in upmarket Hong Kong.
Cost of selling.
Vendor costs – a combination of transfer tax and agents’ fees – add a further 6% to the cost of selling in New York, compared with agents’ fees of about 1% in London or Hong Kong.
Although a ‘mansion’ tax is under consideration in the UK, it’s still unlikely to take the real cost of ownership above New York or Hong Kong.
Market research by Dataloft. All data researched at April 2014. Information accurate at publication date of April 2014.