Govt to tighten home sale rules
Proposal to protect buyers from misleading information
The Hong Kong government on Tuesday launched a two-month public consultation on a proposed bill to tighten legislation on the sale of first-hand homes.
The bill, which is planned to be introduced to the Legislative Council in the first quarter of next year, is intended to protect home buyers from misleading information. Developers could face a maximum penalty of a HK$5 million fine and seven years’ imprisonment under the proposed law.
“There are consumer protections on other areas, and there should be similar protections on selling properties” said Secretary for Transport and Housing Eva Cheng. The proposed bill covers the sale of all completed and uncompleted first-hand residential properties in the city.
It sets out detailed and specific requirements on when and how the information about the flats should be publicized, and provides a standard definition for the saleable area (net floor area) of flats which includes any verandah or utility platform while excluding bay windows and public parts.
The sales brochure will be required to provide the saleable area of the property, and will be prevented from containing any promotional material as well as artist’s impressions of the development.
The consultation paper also imposes heavy penalties on developers and agents who intentionally give fraudulent or misleading information to buyers. Fines ranges from HK$100,000 to HK$5 million, plus imprisonment from a minimum of six months up to a maximum of seven years, depending on the severity of the misbehavior.
Cheng said the proposed legislation is aimed at enhancing the transparency of sales arrangements of first-hand residential properties, and strike a balance between protection for consumers and allowing property developers the flexibility to make commercial decisions based on market conditions.
As the present regulatory framework is unable to cover all the first-hand home transactions in the city, Cheng said the government agreed that there is a general consensus on a need to use legislation to regulate sales to improve protection for the buyers.
The adoption of “saleable area” would enable prospective home buyers to better compare flat prices at different new developments calculated on the same basis, according to the government.
However, as home sales in Hong Kong have always been priced based on gross floor area which includes an apportionment of public areas, other than the saleable area set in the proposal, Centaline Property Agency’s director of research Wong Leung-sing told China Daily the regulation will also affect the second-hand market as well once new homes are inevitably resold.
Justin Chiu, executive director of Cheung Kong (Holding) Ltd said the same day that he believes the city’s developers would support the proposal as it would provide more information to potential buyers and improve the transparency of first-hand home transactions in the city.
The two-month consultation period will last until Jan 28, 2012.
Hong Kong has witnessed a sharp rise in the number of new launches in recent weeks, but home prices in the city have dropped over the past two months, falling by around 2.7 percent from their peaks recorded in earlier 2011 to the lowest in more than six months, according to a report published by Centaline last week.
litao@chinadailyhk.com
China Daily
(HK Edition 11/30/2011 page2)
http://www.chinadaily.com.cn/hkedition/2011-11/30/content_14184644.htm