Understanding HOS Premium Payment in Hong Kong

May 14

3 minutes

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Understanding HOS Premium Payment in Hong Kong post illustrative image

Question 1: What is "Premium Payment"? How is it calculated?

Home Ownership Scheme (HOS) flats are sold at a discounted price (e.g., 30% off); the Housing Authority retains the unpaid 30% land premium interest.
If the owner wants to sell or rent the unit freely in the open market, they must pay the government this 30% in a lump sum, calculated as "market value × original discount rate." This payment is called "Premium Payment."
Amount = Valuation on the application date × Original discount rate
Current market situation: 2023 open market transactions show nearly 95% are HOS flats with premium paid; while in the secondary market (Green Form / White Form Secondary Market Scheme), 98% of transactions involve flats without premium paid, indicating that "unpaid premium" units still dominate.

Issue 2: Subsidized vs. Unsubsidized – How Does It Affect Selling/Renting/Reassignment?

The Housing Authority stipulates: Except for resale in the secondary market after the first sale has reached two years or after the premium has been paid, the owner's rights generally cannot be freely transferred. In special circumstances, the Housing Authority may approve on a case-by-case basis.

Unsubsidized• Can only be sold in the "Secondary Market" to Green Form or White Form Secondary Market buyers• Cannot be freely transferred; unless approved by the Housing Authority under special circumstances (e.g., inheritance)
Subsidized• Can be freely listed on the open market and sold to any buyer• Can be rented out freely without needing to apply to the Housing Authority• Can be bought, sold, or gifted at any time without Housing Authority approval

Question 3: Do Children Need to "Pay the Land Premium First" Before Inheritance?

Usually Not Required: The premium fluctuates with market value, often amounting to hundreds of thousands or more; as long as there are no immediate plans to sell or rent out the property, there is no urgency.

Question 4: What is the difference between voluntary transfer and inheritance after the owner's death?

Voluntary transfer (divorce, separation, or adding children's names) • Must be "at zero monetary consideration" • The intended transferee must be a registered family member, meaning they were included in the household at the time of purchase • If someone outside the family wants to take over, the Housing Authority will not approve unless the land premium is paid first
Inheritance after the owner's death • Also "at zero monetary consideration," but does not require prior inclusion in the family member list • Legal heirs (spouse, children, etc.) can directly apply for approval from the Housing Authority to inherit • After inheritance, the unit remains without the land premium paid; the premium only needs to be considered when selling or renting out the unit

"Paying the land premium" simply means buying back the government's land interest. Whether to pay the premium in advance depends on whether you have short-term plans to sell or rent the property on the open market. If you're looking for a place to live in Hong Kong, why not try our LetsGetHome rental platform!