Table 4 Calculation of transaction costs
From: Valuing options to renew at future market value: the case of commercial property leases
Items | Cost (HK$) | Notes |
|---|---|---|
Transaction costs (S) for tenants | ||
Renewal lease (S1) | ||
Stamp duty | R*5500*12*0.0025 | Annual rent*0.5%*0.5 |
Legal fee | R*5500*12*0.01 | Assume 1% of annual rent |
Subtotal | R*5500*0.15 | |
New lease (S2) | ||
Commission fee | R*5500*0.5 | Half month rent |
Stamp duty | R*5500*12*0.0025 | Annual*0.5%*0.5 |
Legal fee | R*5500*12*0.01 | Assume 1% annual rent |
Relocation costs | 800*5500 | Assume 800HK$ p.s. f |
Subtotal | R*5500*0.65 + 4,400,000 | |
Purchasing: (S3) | ||
Commission fee | P*5500*0.01 | 1% of price |
Stamp duty | P*5500*0.0375 | 3.75% of price |
Legal fee | P*5500*0.01 | Assume 1% purchase price |
Relocation costs | 800*5500 | Assume 800 HK$ p.s. f |
Subtotal | P*5500*0.0575 + 4,400,000 | |
Transaction costs (T) for landlords | ||
Renewal lease: (T1) | ||
Stamp duty | R*5500*12*0.0025 | Annual rent*0.5%*0.5 |
Legal fee | R*5500*12*0.01 | Assume 1% of annual rent |
Subtotal | R*5500*0.15 | |
New lease: (T2) | ||
Commission fee | R*5500*0.5 | Half month rent |
Stamp duty | R*5500*12*0.0025 | Annual rent*0.5%*0.5 |
Legal fee | R*5500*12*0.01 | Assume 1% of annual rent |
Subtotal | R*5500*0.65 |