Progressive Rating System for Domestic Tenements
1. What is the progressive rating system for domestic tenements?
To further uphold the “affordable users pay” principle, the Government proposes to apply higher rates percentage charge(s) to domestic tenements with rateable value over $550,000 (equivalent to a monthly rental of around $46,000). Accordingly, rates will be charged at 5% of the rateable value on the first $550,000, at 8% of the rateable value on the next $250,000 and then at 12% on the portion of rateable value exceeding $800,000.
For domestic tenements with rateable value of $550,000 or below, rates will continue to be charged at 5% of the rateable value.
2. When will the progressive rating system for domestic tenements be implemented?
Upon passage of the Amendment Bill, the progressive rating system for domestic tenements will be implemented with effect from the January to March 2025 quarter. Progressive rates will be charged on affected domestic tenements from the same quarter onwards.
3. How do I know if my property will be subject to the progressive rating system for domestic tenements?
Members of the public may visit the Department’s website for details of the progressive rating system. The 2024-25 rateable value of a tenement has been shown on the Rates and Government rent demand for the April to June 2024 quarter.
Upon passage of the Amendment Bill, if the 2024-25 rateable value of a domestic tenement is over $550,000, progressive rates will be payable starting from the fourth quarter of 2024-25 (i.e. January to March 2025).
In respect of domestic tenements with 2024-25 rateable value over $550,000, the Department has already issued notification letters to individual ratepayers concerned in April 2024, informing them of the potentially higher rates liability upon implementation of the progressive rating system. Whether progressive rates will be charged for subsequent years of assessment for a particular domestic tenement will depend on whether its rateable value for the relevant year(s) is above $550,000.
4. How to calculate the amount of progressive rates payable of domestic tenements?
For domestic tenements with rateable value of $550,000 or below, rates will continue to be charged at 5% of the rateable value.
For domestic tenements with rateable value over $550,000, rates will be charged at 5% of the rateable value on the first $550,000, at 8% of the rateable value on the next $250,000, and then at 12% on the portion of rateable value exceeding $800,000.
Upon passage of the Amendment Bill, the amount of progressive rates charged for the January to March 2025 quarter will be shown in the demand concerned. Members of the public can also use the “Rates and Government Rent Calculator” available on the Department’s website to estimate the amount of rates (including progressive rates where applicable) and Government rent payable for the latest three years of assessment. For the calculation of the amount of progressive rates payable, please refer to the following examples:
Example 1: Domestic tenements with annual rateable value of $480,000
| Annual rateable value of the domestic tenement [A] |
Rates percentage charge [B] |
Calculation [C = A x B] |
||
|---|---|---|---|---|
| First $550,000 | $480,000 | 5% | $24,000 | |
| Next $250,000 | $0 | 8% | $0 | |
| Remainder | $0 | 12% | $0 | |
| Annual rates payable | $24,000 | [D = Sum of C] | ||
| Rates payable per quarter | $6,000 | [E = D/4] | ||
Example 2: Domestic tenements with annual rateable value of $600,000
| Annual rateable value of the domestic tenement [A] |
Rates percentage charge [B] |
Calculation [C = A x B] |
||
|---|---|---|---|---|
| First $550,000 | $550,000 | 5% | $27,500 | |
| Next $250,000 | $50,000 | 8% | $4,000 | |
| Remainder | $0 | 12% | $0 | |
| Annual rates payable | $31,500 | [D = Sum of C] | ||
| Rates payable per quarter | $7,875 | [E = D/4] | ||
Example 3: Domestic tenements with annual rateable value of $1,200,000
| Annual rateable value of the domestic tenement [A] |
Rates percentage charge [B] |
Calculation [C = A x B] |
||
|---|---|---|---|---|
| First $550,000 | $550,000 | 5% | $27,500 | |
| Next $250,000 | $250,000 | 8% | $20,000 | |
| Remainder | $400,000 | 12% | $48,000 | |
| Annual rates payable | $95,500 | [D = Sum of C] | ||
| Rates payable per quarter | $23,875 | [E = D/4] | ||
5. How to define a domestic tenement?
A tenement under the Rating Ordinance (Cap. 116) is a unit of assessment chargeable to rates as recorded on the Valuation List. Whether a tenement is “domestic” or “non-domestic” mainly depends on its mode and character of occupation, and it is generally classified according to the use specified on the occupation permit. The Department classifies a tenement which is used, or intended to be used, wholly or primarily for domestic purposes as domestic, having regard to, among others, its mode and character of occupation.
In general, domestic tenements include typical domestic flats, service apartments, houses, etc., but exclude hotels; guesthouses; child care centres; children’s homes; nurseries; homes for the elderly; orphanages; homes for persons with disabilities; youth hostels; holiday camps; etc.
6. Does the progressive rating system for domestic tenements apply to domestic car parking spaces?
The proposed progressive rating system for domestic tenements is applicable to domestic car parking spaces (including those separately assessed domestic car parking tenements). In general, domestic car parking spaces refer to car parking spaces ancillary to a residential development or the residential portion of a composite development, but exclude fee-paying car parking spaces that are available for rent by the public.
7. What is rateable value?
Please refer to the Rates section under “Our Services”.
8. Can I object to the rateable value of a property? How to make an objection?
In respect of domestic tenements with rateable value over $550,000, the Department already issued notification letters to individual ratepayers concerned in April 2024, informing them of the potentially higher rates liability upon implementation of the progressive rating system, and reminding them that if they were not satisfied with the 2024-25 rateable value, they might submit a proposal on or before 31 May 2024 within the statutory period to object to the rateable value. The Department will review valid proposals according to the established mechanism. Please note that the Commissioner does not have the discretion to accept late proposals. Please refer to the “Objections to Rateable Value Under the Rating Ordinance” in Rates section under “Our Services” for details.
9. After the progressive rating system comes into effect, will the amount of rates payable of a domestic tenement be calculated in accordance with the new system if it is first assessed to rates?
The rates payable of a domestic tenement first assessed to rates following an interim valuation may cover more than one assessment year. Hence, the amount of rates payable for the domestic tenement will be calculated in accordance with its rateable value and the rates percentage charge(s) for the relevant assessment year(s). Upon passage of the Amendment Bill, progressive rates will be levied starting from the fourth quarter of 2024-25 (i.e. January to March 2025) on domestic tenements subject to progressive rating.
10.After the progressive rating system comes into effect, how to calculate the amount of rates payable for the constituent portions which form a single tenement?
Rates are charged at specified percentage(s) (including progressive rates percentage charges where applicable) of the rateable value of a tenement on the Valuation List. For a single tenement on the Valuation List that is formed by two or more rateable portions, the ratepayer may apply for an apportionment of the rateable value of the single tenement among different rateable portions, so as to facilitate the ratepayer in adjusting the respective share of rates payment attributed to a constituent rateable portion by making reference to its proportion of the apportioned rateable value relative to that of the single tenement.
11. What are the carve-outs from the progressive rating system for domestic tenements?
The following domestic tenements are not subject to progressive rates (i.e. rates will continue to be charged at 5% of the rateable value):
- Public rental housing flats:
- public rental housing flats provided by the Hong Kong Housing Authority or the Hong Kong Housing Society; and
- rental housing flats in Tai Hang Sai Estate provided by the Hong Kong Settlers Housing Corporation Limited
- Flats under the public housing scheme known as Light Public Housing or Transitional Housing
- Dormitories that are provided by the following institutions, and in which a substantial portion of the household facilities are designed for shared use:
- non-profit-making registered schools (the dormitories of which are situated within the premises specified in its school registration certificate);
- post-secondary institutions specified in section 2 of the Education Ordinance (Cap. 279);
- the Hospital Authority or The Chinese Medicine Hospital of Hong Kong; and
- religious institutions*
12. The dormitories provided by certain education institutions, religious institutions and Hospital Authority are suggested to be carved out from the progressive rating system. What do these dormitories refer to?
A dormitory is normally made up of rooms provided for different households as residence, and in which a substantial portion of the household facilities (such as kitchen facilities and sanitary facilities, etc.) are designed for shared use among different households occupying the dormitory.
13. If I consider my property eligible to be carved out from the progressive rating system, how can I make an application?
The application details will be announced upon the passage of the Amendment Bill.