Property buyers from Hong Kong or Macau can now transfer the entire amount through their banks to settle the deal
Hong Kong and mainland Chinese banks have started to prepare for a new cross-border payment regime that will make it easier for Hong Kong and Macau homebuyers to transfer the funds they need to purchase property in the Greater Bay Area.
“The new cross-border payment policy for Greater Bay Area property purchase has been set and now the key issue is to make sure it can be conducted smoothly when it becomes effective from February 26,” said Eddie Yue Wai-man, CEO of the Hong Kong Monetary Authority, in a Legislative Council financial affairs panel meeting.
Under the new regime, property buyers from Hong Kong or Macau who purchase real estate in the mainland cities of the bay area will be allowed to transfer the entire amount through their banks to settle the deal, bypassing the daily remittance cap of 80,000 yuan (US$11,240) per day. Staff at Hong Kong and mainland banks have been briefed on the new payment remittance rules that were issued by the People’s Bank of China (PBOC) last month.
Banks will also need to inform their clients about the new arrangements, which will make it easy for those who want to buy properties in the Greater Bay Area, and hence will further integrate Hong Kong and Macau with the mainland cities in the development area.
Eddie Yue Wai-man, CEO, Hong Kong Monetary Authority
“The new policy will solve key pain points for Hong Kong people who want to buy property in the Greater Bay Area as the current daily remittance limits have made it very difficult for people to transfer money to make the payment. It will strengthen Hong Kong’s role as an international financial centre,” said Starry Lee Wai-king, a lawmaker.
The new cross-border payment rule is one of six new measures announced by the PBOC last month with the purpose of enhancing cross-border transactions and integration among the 11 cities of the Greater Bay Area. An expansion of the Bond Connect scheme and enhancement of the Wealth Management Connect mechanism will also start from February 26. Under the broader Bond Connect scheme, foreign investors will be able to use onshore bonds as collateral for yuan-denominated funding from the HKMA and get access to the onshore repo market. Users of the Wealth Management Connect mechanism will be allowed to invest up to 3 million yuan – three times the original quota.
Julia Leung Fung-yee, CEO of the Securities and Futures Commission, said the enhancements will allow securities firms, in addition to banks, to sell products under the Wealth Management Scheme, while the choice of funds will be expanded to include China’s stock funds. “These measures will boost the transactions of the Wealth Management Connect scheme,” she said in a separate session of the same meeting.
Meanwhile, the SFC is working with the Hong Kong stock exchange to help attract international listings from the Middle East and Southeast Asia, she said. It is also working with the bourse to boost turnover through means such as allowing the market to remain open during severe weather and narrowing the trading spread – the gap between the buy and sell prices of stocks – so as to reduce the cost of trading for investors.
Another new policy known as cross-boundary credit referencing will allow banks in Hong Kong and the mainland to share the credit information of companies.