Responding to a parliamentary query, Senior Parliamentary Secretary for Finance, Mr Xu Fangda, said such transactions accounted for only a very small proportion of the overall local residential market and would have minimal impact on the residential and mortgage markets.

He said buyers involved in such transactions were usually spouses or immediate family members, and the additional buyer's stamp duty (ABSD) they had to pay was generally higher, but they could still afford to finance the property.

Xu Fangda also said that the Inland Revenue Department (IRD) had found in its regular monitoring operations that this type of transaction method, although a minority, had increased in recent years.

As a result, the Inland Revenue Department has launched an audit of such transactions to confirm whether they involve tax avoidance. Once the transactions are determined to be tax avoidance, the authorities will recover the stamp duty due and may impose a surcharge of another 50 per cent on the additional stamp duty due.

He also said that estate agents involved in such transactions would be referred to the Estate Agents Council for investigation. If serious breaches of discipline are established, the estate agents involved could face fines or suspension of their licences.

In so-called "99-for-1 home ownership" transactions, buyers are usually first-time buyers and therefore do not have to pay additional buyer's stamp duty.

After executing a power of sale, the buyer transfers a 1% interest in the property to a close relative who already owns another property, and the next of kin will pay significantly less SSD. Some have therefore questioned this type of transaction as an attempt to avoid tax.