Understanding HOS Premium Payments in Hong Kong

May 14

3 minutes

The blog post has been auto-translated.

Understanding HOS Premium Payments 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.
To place the unit on the open market for free sale or rent, the owner must pay back this 30% to the government in the form of "market value × original discount rate." This payment is called the "Premium Payment."
Amount = Valuation on the application date × original discount rate
Market situation: In 2023, nearly 95% of transactions in the open market involved HOS flats with premium paid; in the secondary market (Green Form / White Form Secondary Market), 98% of transactions involved flats without premium paid, indicating that "unpaid" still accounts for the majority.

Question 2: Paid vs. Unpaid Premium—How does it affect sale/rental/reassignment?

According to Housing Authority regulations: Except for resale through the secondary market after the first two years of sale or if the premium has been paid, the owner's rights generally cannot be freely transferred. In special cases, the Housing Authority may approve on a case-by-case basis.

Unpaid Premium• Can only be sold to Green Form or White Form Secondary Market buyers in the "secondary market"• Cannot be freely transferred unless approved by the Housing Authority (e.g., inheritance).
Paid Premium• Can be freely listed on the open market and sold to any buyer• Can be rented out freely without applying to the Housing Authority• Can be bought, sold, or gifted at any time without Housing Authority approval.

Question 3: Do children need to "pay land premium first" before inheriting?

Usually not necessary: Land premiums fluctuate with market value, often amounting to hundreds of thousands or more; as long as there are no immediate plans to sell/rent out, there's no urgency

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

Voluntary transfer (divorce/separation, adding children's names)• Must be at "zero monetary consideration"• The intended recipient must be registered as a family member (i.e., listed in the household during initial purchase)• If a non-family member wants to take over, the Housing Authority won't approve unless land premium is paid first
Inheritance after owner's death• Also at "zero monetary consideration", but doesn't require prior listing as family member• Legal heirs (spouse, children etc.) can directly apply to Housing Authority for inheritance approval• The inherited property remains with unpaid land premium; premium only needed when selling or renting out

"Paying land premium" simply means buying back the government's land value interest. Whether to prepay depends on your short-term need to sell/rent in the open market. If you're looking for a place to live in Hong Kong, try our LetsGetHome rental platform!