The Hong Kong Monetary Authority (HKMA) on Thursday announced that a pilot plan, allowing the transfer of proceeds of residential property sales in as fast as one day, will be extended to cover the secondary market from the end of the month.

Currently, a buyer's mortgage loan proceeds are settled via lawyers' accounts using physical cheques, taking two working days for the property seller to receive the funds after the transaction.

But under the Payment Arrangements for Property Transactions (PAPT), such proceeds would be transferred to the property seller's bank electronically, enabling the seller to receive the sale proceeds on the completion day at the earliest.

The PAPT previously covered the refinancing of mortgage transactions, but is set to be extended to cover the proposed sales and purchase transactions of residential properties in the secondary market from February 28.

Speaking at a press briefing, Arthur Yuen, deputy chief executive of the HKMA, described the move as a milestone for Hong Kong.

"Under the PAPT arrangement, the transactions become more direct and safer. At the same time, it can also reduce the credit and operational risks faced by the banking industry when handling such transactions," he said.

Also speaking at the event was Sun Yu, chairperson of the Hong Kong Association of Banks (HKAB), who noted that the PAPT arrangement has been gaining popularity since it launched in 2022.

He added that data showed that over 75 percent of the eligible refinancing transactions had been carried out through PAPT over the past six months.

"Currently, we are providing training for all frontline units to ensure the smooth implementation of the service," he told reporters.

"We are fully confident that the PAPT would provide a reliable electronic payment solution for both parties involved in the property sale and purchase transactions, while facilitating the digitalisation of the mortgage loan process," he said.

Separately, Roden Tong, the president of the Law Society of Hong Kong (LSHK), noted that PAPT has so far handled over 15,000 transactions over the past three years, but stressed that it is voluntary for citizens to use this service.

"When citizens are choosing the payment methods, they can also consider about the specific circumstances of each transaction, the arrangements of the bank, and factors such as the amount involved, etc, and to discuss with their lawyers to see which way is the most suitable one," he said.

When asked if the arrangement could be further extended to cover the primary residential market, the commercial property market, as well as subsidised housing units in the future, the HKMA said that there is no timeline for now.

The PAPT plan was jointly announced by the HKMA, HKAB, the LSHK, as well as the Estate Agents Authority. It is also supported by the Consumer Council.