Buying a house? Yes or No?

[Double Asymmetric]

Hello,

not a lot of discussion on these boards about the pros and cons of using a housing allowance to buy rather than rent in Honkers. As a relative newbie, would be keen to hear some opinions on buying.

Does anyone actually know of anyone who has LOST money or done badly by buying? I have heard the success stories around SARS etc. Over a longer time span real estate generally is a pretty forgiving investment even if you buy at the top of a cycle...would you say this holds true for HK?

Keen to hear some opinions and personal experiences....

DA

[404 Titan]

There are some that bought at the dizzy highs of the 97 bubble that still haven’t come within 50% of making their money back. :uhoh: :eek:

[Night Watch]

To be honest if I could afford to buy I would....

But wait i hear you say "You work for a major Airline, you should be able to buy something.... after all your company is paying it off for you"

The fact of the matter is that with a one of two Dependents, it's not all that easy to save enough for the deposit and I'm in the hole enough at the moment I don't want to borrow for the deposit.

You'd be surprised how many are in the same position!

[Captain TOGA]

Myself, I bought a big boat. And I'm tellin you, it was big!!! Lost the shirt on that one.

[Justinian]

This is a thread I hope will go into the future! I am waiting for a start date from Cathay, and having being involved with the property market in my own country I would also like to dind out more.

If anybody has some time in due course, can ypu please answr the following q's:

1. What is the process for bying property? What I mean by this is, once you have found something that you like, how do you take it from there. Do the property agents arrange the bond or the byer. What are the current interest rates in Hong Kong. What other rates and taxes are applicable etc. The list is endless so creativity might be handy...

2. I am particularly interested in the following scenario. Suppose you buy a place an S/O, and withing a couple of years you start a family and want to move onto soemthing bigger, are you allowed to apply for a second mortgage, rent the first place out, and still receive the mortgage assistance from CX?

Thank you in advance

[tryhard]

Justinian, yes you can rent your last place out. Just don't get caught as you will be subject to a D and G sacked and thrown out on to the streets like 2 other FO's recently. The company don't take kindly to people trying to be smart with their money. Remember they are the ones with the brains...................Enjoy your time at CX it really is a very nice place to work.:yuk:

[svengoren]

Tryhard, why dont you try hard and get the facts right about the two F/O's you moron

[Numero Crunchero]

For the newbies,
you get half the allowance for first 2 years if you join as an SO. That would mean around 24K/month I think but it varies from month to month as it is linked to some property price index.

Can you lose money...absolutely. As 404 has posted, those that bought in the mid 90s are waiting to recover their money back, not make any, just recover. The general rule is you dont lose in property but you could be waiting an awful long time. Prices in japan are still below the peaks of 20years ago.

ONto numbers...lets say you get $48K for purchasing(after 2 years here). You pay tax on it so that makes it about $40K. Take out management fees, government rates and rent and that leaves you with about $34K. Interest rates here are just over 5% at the moment so that amount would support a loan of up to $8million. That should get you around 1200 ft2 in midlevels or say 1500+ ft2 in DB. You will need to come up with the deposit somehow. That is 30% but you can get more out of the bank but not 100%. If you decide to move into a bigger place, as a buyer or renter, no problem. Your housing assistance moves with you though, it cannot be used to pay off a house you are not living in.

clear as mud?

[tryhard]

OK Sven, the facts are 2 FO's were sacked for effectively doing what Justinian is suggesting. Cold hard fact.........Personal insults will not be tollerated here my friend, I will have to issue you with a stern warning this time but next time I'm reporting you to the moderator. Smarten your ideas up son!

[Harbour Dweller]

Justinian,

2. I am particularly interested in the following scenario. Suppose you buy a place an S/O, and withing a couple of years you start a family and want to move onto soemthing bigger, are you allowed to apply for a second mortgage, rent the first place out, and still receive the mortgage assistance from CX?


Yes you are able to do this.

Simply inform CX Housing that you wish them to stop paying the mortgage for property A. CX must have nothing to do with property A from this point. Once this is done you are free to rent out property A.

Now you can continue to use the CX mortgage assistance to pay off your next property, property B.

Many people have done this and CX Housing Dept will assist you all they can with the process.

[svengoren]

Tryhard,

Firstly they were dismissed because they were effectively living together neither of them rented their places out whilst Cathay was paying for it, in fact they were never even accused of it by CX only by idiots like yourself.

Now run along and report me

[tryhard]

What I am suggesting SVEN is that they were defrauding the company in the same way this Justinian chap would be if he were to do what he says was going to do with his housing. He would be dealt with the same way as the other 2 FO's were. Again, I'm not making accusations about anybody. Just using that very recent case as an example. Simmer down boy......

[stillalbatross]

man, has this thread gone off on a tangent. I just bought and all seems ok, you don't need the deposit as the banks have a degree of liquidity they would currently rather not have. IE they are swimming in a sea of money so you should be able to finance the whole shooting match, in one form or another. Couldn't be bothered reading the drivel thus far but remember that you can rent considerably better than you can afford to buy (if you are entering the market now). It is also sometimes difficult to go from big flash rental to smaller owner occupier for yourself.

[svengoren]

OK Tryhard after reading your posts on the Australian forum I see your just a **** stirer that shouldn't be encouraged

[777300ER]

OK Tryhard after reading your posts on the Australian forum I see your just a **** stirer that shouldn't be encouraged

Well why are you encouraging him then??????? :ugh:

[EngineOut]

I understand you get up to about 22K for the first 2 years as an SO, then up to about 44K. Once you get upgraded, how much do you get as a first year:
1)JFO
2)SFO
3)Capt

Thanks.

EO.

[HotDog]

I know things have changed somewhat since I retired after 25 years with CX but I can tell you that the only smart thing I have ever done with money, was to buy my own house in Hong Kong. Cathay bought it for me several times with the rent allowance and the proceeds from the eventual sale netted me heaps more than my A scale provident fund payout.:ok:

[SNS3Guppy]

Personal insults will not be tollerated here my friend, I will have to issue you with a stern warning this time but next time I'm reporting you to the moderator. Smarten your ideas up son!


Sad days...

[HotDog]

Don't let it worry you SNS, just call up tryhard's previous posts and you'll understand the situation. Just ignore it.

[tryhard]

Hot Dog,

Things have changed a bit since your days mate. Wake up and bug out. You have no place as an ex A scaler making comments to a prospective D scaler. I think your perspective on Cx may be slightly tainted. (With lashings of "The good old days")

[horserun]

Is there anyone who could answer EngineOuts question.????
I would like to know also.

[HotDog]

Tryhard, the advice on buying your own home and letting Cathay pay it off is still valid as far as I am concerned. Obviously it will only work for someone who has a long term commitment in view with Cathay so it probably wouldn't suit you too well. As far as waking up and bugging out, that is my prerogative but thanks for the advice, son. :rolleyes:

[Numero Crunchero]

horserun + engine out
you get half the allowance for the first 2 years as an SO. The allowance varies as it is linked to some hkg property price index. At the moment I think it is around 48, so you would get 24 for first 2 years.
From 2 years on until 8years in the company you get the allowance, 48 right now. From 8years until CN you get an amount half way between the allowance and CN allowance(73?). So you would get around 60K. Then as CN you get the CN allowance, currently 73ish?

Note, whilst you are getting the lower allowance 24 then 48, you pay nothing out of your pocket. If you choose to go above that 48 to 60 as 8year employee, or 73 as CN, you pay 8% of the rent out of your pocket.

Once you have a lease or morgage, the amount you receive is locked in for 2 years usually. After 2 years you can then rent/buy for whatever the current allowance is.

clear as mud?

[Busbert]

Regarding rapidly paying off a mortgage, the sweet-spot is at around HKD 3-4m for your first apartment/boat, i.e. big enough to live in, but small enough to pay off reasonably quickly. This also reduces the risk regarding prices, because if you are paying off almost 0.5m a year, it is hard to be left in negative equity for long.

My first apartment was around 3m/1200' and after about 3 years and paying off over half the mortage I bought a bigger place 8m/1600'. I remortgaged the first place up to brake-even point on rental income (back to 3m), and then used the remortgaged amount to pay the 10% deposit, mortgage insurance, stamp duty and reno cost for the new apartment.

This is the hypothetical case that would get you sacked and was alledgedly the case with the sacked FO's:
Both parties bought an apartment each (his and her's) and individually claim full owner occupier allowance to cover both mortgages. You can do this without contravening the T&C's of the housing scheme, so long as you remain an owner-occupier, and you are not married to the other person. If you are a married couple, only one party can claim the full allowance.
They move into the bigger apartment together and rent out the other apartment to a third party, while still claming owner-occupier assistance on both apartments.

In this hypothetical case the person not claiming the full allowance could have claimed the 24k basic allowance, but chose not to go this route and continued to claim the full allowance.

This doesn't comply with the housing scheme conditions, and would result in the company being out of pocket about 20k per month.

Last year Personnel announced an amnesty last year listing the types of abuses that might be occurring and offered a few months leeway for people to own-up and come to some arrangement to pay back any excess payments to the company. I can only assume that the people involved did not take this opportunity to come clean, and were found out.

My opinion is that the housing scheme can be used quite legitimately as a get-rich scheme, and the owner-occupier option is superb if you are not too risk adverse. There are enough 'allowed' ways to use the scheme to your advantage, that you would have to be crazy to try to pull a fast one on the company.
They are not (entirely) stupid, and it only takes one jealous person to grass you up...

[SOUTHPAC]

Busbart,

Just to clarify your hypothetical case,

One F/O was RENTING, the other DID NOT rent there place out to a third party.

The Cathay rumour mill, just unbelievable!!

[CMOTDibler]

....rather than other issues that muddy the waters.
There are actually some very valid and worthwhile comments if you sift through the replies to your original question.

You must initially decide how risk adverse you are. Buying a house has the potential to set you up very nicely but it ties you to Hong Kong should anything go wrong. How much of a risk you think it is to lose your job/liscense only you can decide, regargless of what some will rant about on this site.

As has been stated the smaller the initial outlay the easier it is to get equity in the property and bug out should anything go wrong. For me it was $5 mil (as was mentioned 3-5 mil is a fairly safe target but don't expect much size wise)

Obviously the greater the purchase price the bigger the potential gains but the greater the risk if property takes a dive or you have a 'bad life event'.

Renting removes all of this risk as you simply up stakes and leave. The figures by Numero and others nicely explain how much you will get for either option.

My advice, for what it is worth, is take your time. Get to HK, rent a place for at least 12 mths and get comfortable. Then start your research, whats the market doing, where do I want to live, how big place do I need for my family, do I feel comforrtable with work, do I actually want to live in HK for the next 5 years or so and lastly, what realistically can I afford given the large initial outlay and associated costs.

If you think you are going to be here for a while I would go for it. If you have time on your side it obviously reduces the risk as you can ride out the dips and sell in a boom. The Golden Rule is to never be in a position where you are forced to sell. We purchased after 1 year by borrowing the deposit against one of our overseas properties, the mortgage has been paid down by CX to 3.5 mil and the house next door just sold for 9mil so for us it has been a great investment.

Hope that helps

[Mr. Bloggs]

Then one day your TERMINATED! Why you may ask? Maybe you let your friend stay at your flat while you were on leave. Or maybe you stayed at your friends flat while yours is being renovated. Or it could be the unfortunate sims you had trying to achieve a Cat A S/O status. Or it could be peanuts.

My opinion, wait until at least 18 months. See how your Sims are going and what the write up’s are. If you start with some bad write ups, expect a difficult time. Don’t give them an excuse. Know it all and don’t &^$@ it up.

You don’t want to buy a house and then be terminated because you cannot upgrade to JF/O.

What is the rental market like? What will your flat rent out for? Will it cover the mortgage? All sorts of questions.

Will you last in HK? Will the Misses last in HK? Will it affect her asthma? Is it too polluted?

Wait and see how it turns out.

If you are going to buy. Buy the biggest Goddamn place you can afford and mortgage as much as you can with other loans, so if you do get terminated, leave the keys on the DFO's desk, We will make sure HSBC gets them.

[Numero Crunchero]

For those of you about to join, you dont get the full purchasing amount until the 2 year mark. So you have plenty of time to decide. Just get here, get the courses out of the way and enjoy the lifestyle!

[regretCX]

Cruncher- you sound like you are selling cheap package holidays to Spain! C'mon mate tell everyone what it's really like. You sugar coat CX like all you do in Hong Kong is sit on a pristine white sandy beach all day sipping Martini's!
It ain't like that is it.:=

[CAN-NOT!!]

CRUNchies,
The lifestyle that I can remember as a Cathay pilot was one that involved a lot of stress because of all the hoops that CX threw at me. Sim checks, ERAS grading system, upgrade tech interviews, review boards (The Star Chamber), and many of the A-hole checkers that went out of their way to ruin people lifes.
So tell me, what is it with that lifestyle that you enjoy so much? Taking big gulps with the kool-aid are ya?

24 hours to go before I'm banned from Pprune.

[regretCX]

Sad days if you're banned for giving people the facts. Will just demonstrate to me who in fact is running this website.

[404 Titan]

CAN-NOT!! & regretCX

If you didn’t like it in CX and you found it stressful, good for you that you decided to leave. You won’t get any argument here. Where you will find an argument or disagreement with a lot on this forum is assuming just because CX wasn’t for you it isn’t for anyone else. Most of us here have experienced the problems you describe but most of us just get on with the job and put it behind us. We don’t dwell on it and let it eat us alive. I and many have chosen to live to a ripe old age. I don’t want to die from a heart attack because I am bitter, twisted and stressed all the time. Regular meditation works wonders.

By the way you won’t get banned from this forum if you follow the rules, something our mate tryhard found hard to grasp.

[Five Green]

404 "Regular meditation works wonders."

eerr did you mean MEDICATION ?

FG

[regretCX]

I think what you are saying Titan is become a yes man and don't buck the system and you will fare well. I'm sorry but I'm not a yes man. I have a fundamental problem with people in high places that have no place being there! CX has this disease in chronic proportions.

[Mr. Bloggs]

I put it down to “Battered Wife Syndrome”. I watch Oparh too!

Some stay and take the beating and some leave. Most get accustomed to the beatings.
:}

[regretCX]

The Cathay ethos "The beatings will continue until morale improves"

(Never a truer word has ever been spoken when you are talking obout this company) Actual quote from Senior Cathay Captain.:D

[Numero Crunchero]

regretcx, et al,
you are right. Every other airline and every other job on earth is better than cx. Thanks for making that clear. I have met so many pilots that wish they worked 60hr weeks as lawyers, accountants, marketers, and I have never met any one in any other profession that envied mine!

[MAX]

Is it possible to take the housing assistance as part of your salary and pay the tax on it?

Is this what commuting pilots do?

MAX:cool:

[leftof]

Southpac I understand there are already rules setting out on what is to happen if two officers use the same dwelling and if they were unsure did they ask the simple question to the housing department. If something sounds too good then it normally is.
As for buying it is like everything research the market in Hong Kong then do the maths and like everywhere when you first buy a house there is normally something that has to give for a short period of time but considering the levels are still not back to where they were previously then there is a fair chance there is still a way to go before it slows down.
Good Luck if you decide to buy and remember it is high up on the stress level gage so do it after you have the initial courses out of the way

[Five Green]

Housing is taxed. The owner gets taxed at a salary rate and the renter gets taxed at a reduced rate.

You can take a reduced housing with no questions asked. You do not need to show a lease or mortgage, and it is about half the normal allowance.

Cheers

FG

[404 Titan]

MAX

If you take the reduced housing as cash and not declare a lease you will be taxed at the highest rate. Depending on how much the lease is you may be better off signing a lease for the minimum amount of your allowance and registering it with the company to take advantage of the much lower tax. Just a thought.

[Numero Crunchero]

The tax on housing is a little complicated, but I will try to keep the explanation simple.

Buyer,
cx will refund you (up to the current limit -48K?) your full mortgage payment. If you get a smaller loan, you pay it off over a shorter term to ensure it reaches that $48K monthly figure. Unfortunately, receiving that money is now declared as a cash allowance (used to be rental assistance) and so you are taxed on the full amount - 16% of 48K is about $8K extra in tax a month.

Renter,
if you dont declare a lease, or lease is less than basic rate of $24K, you will pay tax on full $24K - so about $4K. If you declare lease AND lease is for at least $24K, you pay no tax on the actual amount received (between $24K-$48K). However, as the HK IRD would like to tax you for receiving a rental allowance, it pseudo increases your income by 10% and taxes you on the increased amount. So if you had earnt say $800K as an FO in basic annual salary, it will tax you at 16% on $880K, even though you have received say $576K in rental assistance and paid $576K to landlord.

Renter after 8years in the company or those whose rents are more than allowance,
If the rental assistance you get does not cover the full rental, you may deduct the extra bit you pay from the 10% factor. So if you had been paid $800K as an FO, paid rent of say $600K and received $576K ($48K x 12) in rental assistance, you will be taxed on $800K +$80K(10%) - $24K ($600-$576) = $856K taxable amount. If your rental contribution is more than the 10%, you can only reduce your taxable income by the 10%.

The above in principal applies to first 2 years as an SO, but different numbers.

I am not sure if you add the 10% factor to salary and cash allowance in the case of purchasing as I have never been in that situation - so not sure.

clear as mud?