(Figures are based on assumption and for reference only)

HPA is the difference between the market value of the property being acquired and the cost of a notional replacement flat on vacant basis of 7-year old in the same general locality and having similar size as that of the property. SA is an allowance payable to an owner who partially or wholly leases out the property or leaves the property vacant.

Assuming the market value of a domestic flat on vacant possession (VP) basis is HK$800,000 and the cost of a replacement flat of 7-year old and similar size in the same general locality is HK$2,000,000. The HPA will then assumed to be HK$1,200,000.

Example One

An owner of the above domestic flat who lets out the entire flat
This owner will get the market value of his flat (subject to tenancy) of HK$752,000 (HK$800,000 x 94%) and SA of HK$600,000 (HK$1,200,000 x 50%). In total, this owner will receive HK$1,352,000.

Example Two

An owner of the above domestic flat who occupies half of the flat and leases out the other half
This owner will get the market value of his flat (subject to tenancy) of HK$776,000 (HK$400,000 + HK$400,000 x 94%) and HPA of HK$600,000 for the owner-occupied portion and SA of HK$450,000 (HK$600,000 x 75%) for the tenanted portion. In total, this owner will receive HK$1,826,000.

Example Three

An owner of the above domestic flat who occupies the entire flat for his own use
This owner will get the market value of his flat (VP), which is HK$800,000, plus HPA which is HK$1,200,000. In total, this owner will receive HK$2,000,000.

Example Four

An owner of the above domestic flat who leaves the entire flat vacant
The owner will get the market value of his flat (VP), which is HK$800,000, plus SA of HK$600,000 (HK$1,200,000 x 50%). In total, this owner will receive HK$1,400,000.