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Following is a question by the Hon Lee Wing-tat and a written reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (May 26):
Question:
Regarding the nine new proposals to regulate the sales of first-hand private residential properties announced by the Financial Secretary earlier, will the Government inform this Council:
(a) given that the new proposals include requiring developers to comply with the guidelines of the Real Estate Developers Association of Hong Kong (REDA) in selling uncompleted and completed first-hand private residential properties, yet among the 13 sets of published sales guidelines, only two sets have Chinese versions while the remaining ones are in English only, whether it knows the reasons for that, and whether the authorities will require all sales guidelines issued by REDA to have Chinese versions;
(b) whether it knows if all developers (including non-REDA members) are required to comply with REDA's sales guidelines; if not, the respective developers who are required and not required to comply, and what penalties REDA will impose on those developers who are required to comply with the sales guidelines but are found to have violated the guidelines; whether the Compliance Committee under REDA is responsible for monitoring the sales of completed first-hand private residential properties; the number of complaints received by the Committee in the past three years, the contents and results of such complaints as well as the penalties imposed;
(c) given that the new proposals include requiring that more units should be included in the first price list, and for small-scale development, the minimum number of units to be included is 30 units or 30% of the total number of units available for sale, whichever is the higher, whereas for large-scale development, the minimum number of units to be included is 50 units or 50% of the total number of units available for sale, whichever is the higher, of the respective definitions of small-scale development, large-scale development and units available for sale; whether the authorities will consider adopting the number of units available for pre-sale set down in the approved Consent Scheme on the pre-sale of uncompleted first-hand residential properties (the Consent Scheme) as the definition of units available for sale; if they will not, of the reasons for that; whether they will consider requiring that the small-scale development cannot be sold in batches and, if the large-scale development is sold in batches, a third requirement is to be added on the number of units to be included in the first price list, apart from the aforesaid two requirements concerning the first price list, i.e. the provision of a price list of at least a certain percentage (for example, 30%) of the units of the entire development, whichever of the three is the higher, so as to prevent the situation of, for example, if only 100 units of a large-scale development with 2,000 units in total are to be sold in the first batch, the first price list is required to include 50 units only;
(d) given that the new proposals require that developers should concurrently upload the sales brochures onto their websites, yet it has been learnt that important terms in land leases and deeds of mutual covenant contained in most of the existing sales brochures do not have Chinese versions, whether the authorities will consider requiring that important terms in the land leases and deeds of mutual covenant contained in all sales brochures should have Chinese versions;
(e) given that saleable areas of units sold are not specified in existing Preliminary Agreements for Sale and Purchase (ASPs), whether the authorities will consider exercising regulation by requiring the specification of saleable areas and other areas of units sold in Preliminary ASPs;
(f) whether the authorities will consider adding the requirement that developers are to make public, within 24 hours after the signing of Preliminary ASPs, records of ASPs, including regular updates of transaction information such as the ASPs signed, transactions completed or cancelled, as well as the areas and prices of the units concerned, etc.;
(g) whether the authorities will consider including in the requirements under the Consent Scheme the eight enhanced measures launched by the Urban Renewal Authority recently to increase the transparency of the sales procedures of redeveloped buildings, or requesting REDA to include such measures into their sales guidelines; and
(h) given that the newly revised proposals allow developers not to make public the price list at least three days in advance of the commencement of sale when selling a whole block of building or a whole phase of several buildings, how the authorities ensure that after the developer has resold a whole block of building or a whole phase of several buildings, the new buyer will, when selling individual units to any persons, comply with the newly proposed requirement of making public the price list at least three days in advance of the commencement of sale, the requirements under the Consent Scheme or REDA's sales guidelines?
Reply:
President,
To further enhance the transparency of information and the fairness of transactions related to the purchase of private housing units, the Transport and Housing Bureau (THB) will put in place nine new enhancement measures. These include strengthening the regulation on show flats, and enhancing the transparency of sales brochures and price lists, and clarifying transactions involving Board members of the developers and their immediate family members.
The Lands Department (LandsD) has included the nine measures in the Consent Scheme with effect from May 14, 2010. The Real Estate Developers Association of Hong Kong (REDA) will issue guidelines on the nine measures to take effect from June 1, 2010.
We will closely monitor the effectiveness of the nine measures upon implementation. Should these new measures prove to be ineffective, we do not rule out the possibility of introducing further legislative measures.
My reply to the eight questions is as follows:
(a) REDA's guidelines are uploaded onto the websites of the Consumer Council and the Estate Agents Authority for public reference. We have requested REDA to provide Chinese versions of its guidelines as soon as possible to enhance public awareness. REDA is in the process of doing so. The new guidelines on the nine measures will be available in both Chinese and English.
(b) The nine measures will apply to the sale of all first-hand private residential properties, including uncompleted and completed first hand flats.
Given that the intention of the nine measures is to better protect individual prospective flat buyers, we see no objection in principle for the sale of uncompleted or completed first-hand private residential properties to a single purchaser on an "en bloc" basis under a single transaction be exempted from the new requirements on sales brochures, price lists and show flats. However, we require that for transparency sake, developers should still observe the "5-day disclosure rule" for en-bloc sale and provide on their websites and in sales offices the transaction information within five working days after the signing of the Preliminary Agreement for Sale and Purchase (PASP) (or the Agreement for Sale and Purchase (ASP) if there is no Preliminary ASP in en-bloc sales). Further, we require that if the en-bloc sale involves members of the bard of the developers and their immediate family members, the developers should include such information when making public the transaction information. We also require that, when the properties sold on an en-bloc basis are later put on sale to individual flat buyers in the market, the owner must still observe all the nine measures.
We will implement the new measures through the Consent Scheme where appropriate and through REDA's guidelines. According to past experience, developers will normally follow REDA's guidelines regardless of whether they are REDA members or not.
REDA has set up a Compliance Committee which comprises outside members. REDA will refer non-compliance cases to the Compliance Committee for deliberations as necessary. The Compliance Committee may determine sanctions against developers found to have breached the requirements under REDA's guidelines, including issuing warning letters or reprimanding privately or in public. According to REDA, it received about 30 complaints in relation to the sales of uncompleted private first-hand residential properties from 2007 to 2009. The nature of and the findings on those complaints did not require the cases to be heard by the Compliance Committee.
We will closely monitor the effectiveness of the nine measures upon implementation. Should these new measures prove to be ineffective, we do not rule out the possibility of introducing further legislative measures.
(c) Under the nine measures, developers are required to provide more units in the first price list of every batch of units put up for sale. For a large-scale development which contains 100 units or more in total, the first price list must include not less than 50 units or 50% of the total number of units put up for sale in each batch, whichever is the higher. For a small-scale development which contains fewer than 100 units in total, the first price list must include not less than 30 units or 30% of the total number of units put up for sale in each batch, whichever is the higher. For a small-scale development or a specific phase of development which comprise 30 or less units in total, developers must include all the units in the first price list.
For developments of individual "houses", given that this type of projects is normally limited in number and has a specific group of customers, we have no objection in principle to exempt them from the requirement on the minimum number of units in the first price list, but developers of these developments are still required to comply with all the other new measures, including the requirement to make public the price list at least 3 calendar days in advance of the commencement of sale and to concurrently upload the price list onto their websites.
We are satisfied that our proposal has struck a balance between enhancing price information transparency and providing a degree of flexibility for developers to take into account market conditions when devising their sale strategies.
(d) Deeds of Mutual Covenant (DMCs) are bilingual documents. Since October 2009, developers are required under REDA's guidelines to provide both the Chinese and English versions of the salient points of the DMCs in the sales brochures. As for the Government Lease, developers will normally provide only the English version of the salient points of the Government Lease in the sales brochure given that the Government Lease provided by the Lands Department is in English only. We will request REDA and the LandsD to consider providing Chinese translation, in addition to the English version, of the salient points of the Government Lease for inclusion in the sales brochures and uploading onto developers' websites.
(e) Information on the saleable area of a residential property is a standard item in the standardised price list proforma which developers have adopted since October 2008. Also, information on saleable area has to be provided in sales brochures. Under the nine measures, developers are required to make public and upload onto their websites sales brochures seven calendar days prior to the commencement of flat sale and price lists three calendar days prior to the commencement of flat sale. These measures will ensure that flat buyers are provided with the necessary property information, including information on the saleable area of the units, before making their purchase decisions.
(f) Since December 2009, developers are required under REDA's guidelines to make available transaction information in the sales office and their websites, including the transacted unit, transacted price and date of execution of the ASPs within five working days after signing the PASPs. At present, developers and flat buyers will normally sign the ASPs within five working days after signing the PASPs. If we require developers to make public the transaction information within 24 hours after signing the PASPs, the information to be made public will be premised on PASPs. Transactions will be more likely to proceed to completion after entering into the ASP because by then the buyers will have made a higher amount of payment. Therefore, for clarity of information, we consider it more appropriate to make reference to transaction information which is based on ASPs instead of PASPs.
(g) The measures which the Urban Renewal Authority (URA) announced on May 3, 2010 which its partner developers are required to comply with are in line with the principles of the nine measures, namely to enhance the transparency of information, in particular on transactions and prices, and fairness of transactions. As a developer itself, URA may set its own requirements on its partner developers taking into account the nature of its projects when entering into a contractual relationship with them.
(h) For en-bloc sale as mentioned in (b) above, we have required REDA to include in its guidelines that when the properties sold on an en-bloc basis to a single purchaser are later put on sale to individual flat buyers in the market, the purchaser concerned should observe all the nine measures. We will closely monitor the effectiveness of the nine measures.
Ends/Wednesday, May 26, 2010
Issued at HKT 12:45
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