Some Hong Kong developers are using cash rebates as stealth discounts, raising regulator's ire.

Social media has been abuzz with discussions on how developers are offering cash rebates - a form of under-the-table discounting through private negotiation - to attract buyers. These incentives, in some cases, can reach as much as 50 per cent of the value of a new property.

The Sales of First-hand Residential Properties Authority (SRPA) said it had noticed some developers were offering very high commissions to property agents to boost the sales of new homes, while agents were passing on such rebates to their clients.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Although both these practices are commercial arrangements, the authority said it could investigate "to see if there is any misrepresentation or dissemination of false or misleading information by the vendor to induce another person to purchase any specified residential property".

The SRPA noted the registered transaction prices were much higher than the actual purchase prices paid by the buyers.

One social media post said a 28 per cent cash rebate was given to buyers of homes in Chill Residence in Yau Tong, jointly developed by Poly Property and L'Avenue International Holdings.

Other developers such as Top Spring International Holdings and Chun Wo Development Holdings were offering up to 50 per cent for the 128 Waterloo project in Ho Man Tin, according to a senior executive at an international property consultancy, who requested anonymity.

Poly Property and Chun Wo did not reply to requests for comment.

Potential homebuyers check out the configuration of units at a Hong Kong property project. Photo: Yik Yeung-man alt=Potential homebuyers check out the configuration of units at a Hong Kong property project. Photo: Yik Yeung-man>

Banks are required to offset the cash rebate from the flat's purchase price when determining the maximum loan amount, according to the Hong Kong Monetary Authority's guidelines.

The SRPA has been distributing leaflets on the risks associated with high rebates at developers' sales offices to remind prospective buyers how the rebates may affect the bank mortgages and the stamp duty payable.

"Buyers should conduct risk assessments and be prepared in case promises of rebates do not materialise in the end," the pamphlet said.