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Following is a question by the Hon Frederick Fung and a reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (January 23):
Question:
In the past, developers and estate agents presented the area of a residential flat in terms of its gross floor area (GFA), on the basis of which the per-square-foot property price was calculated. The Estate Agents Authority (EAA) has issued a practice circular stipulating that when handling sale or lease of second-hand residential properties from January 1, 2013 onwards, estate agents have to provide information on the saleable area (SA) of such properties to clients, and that the per-square-foot property price provided to clients has to be calculated on the basis of SA (the new requirement). Besides, the Residential Properties (First-hand Sales) Ordinance will come into effect on April 1 this year and the enforcement agency concerned will be set up and commence operation at the same time. Developers will then have to provide information on SA of first-hand residential properties, which is calculated according to a standardised definition, and the per-square-foot property price calculated on the basis of SA, so that property buyers will clearly be informed of the actual size of a flat, which will facilitate comparison and reduce their chances of being misled. In this connection, will the Government inform this Council:
(a) whether it knows how the new requirement has been implemented, including the number of inspections conducted by EAA, the number of non-compliance cases and the situation of non-compliance identified, as well as the number of complaints received and the follow-up actions taken; given that the new requirement has been enforced for three weeks, whether EAA has considered introducing new measures to promote better compliance by the trade and enhance the public's understanding and awareness of the new requirement; whether the authorities will consider providing the public free access to information on SA of residential flats from the Rating and Valuation Department; and
(b) given that the new requirement has been implemented first in the second-hand residential property market but the practice of using GFA still continues in first-hand residential property transactions before April 1 this year, whether the authorities have assessed if such a situation has given rise to confusing messages in the market, which may baffle buyers; whether the authorities will consider requesting developers and estate agents to co-operate voluntarily to advance the provision of information on SA and per-square-foot property price calculated on the basis of SA when selling first-hand residential properties; if they will not, of the reasons for that?
Reply:
President,
At present, when vendors offer to sell uncompleted residential properties which require the consent of the Director of Lands (i.e. Lands Department Consent Scheme (the Consent Scheme) projects), they have to comply with the Consent Scheme requirements. Vendors which are members of the Real Estate Developers Association of Hong Kong (REDA) are encouraged to comply with REDA guidelines when selling uncompleted residential properties. Since October 10, 2008, the Consent Scheme and REDA guidelines have required, among other things, that the sales brochures and price lists of uncompleted residential properties provide information on the Saleable Area (SA) and the price per square foot in SA of a residential property. According to our records, when offering non-Consent Scheme projects for sale, almost all REDA members abide by REDA guidelines regarding the provision of SA information.
The Estate Agents Authority (EAA) issued a practice circular in May 2011 requiring estate agents practitioners to provide prospective purchasers of first-hand residential properties with information regarding the area of the property and the price per square foot or square metre in SA as contained in the price list(s) supplied by the developer. Subsequently, accordance to EAA's another practice circular issued in May 2012, estate agents practitioners are required to, with effect from January 1, 2013, provide their clients of the second-hand residential properties with area and price information on SA.
In short, purchasers have had access to information on floor area and price per square foot/metre in SA for both first-hand and second-hand residential properties for a number of years.
The Residential Properties (First-hand Sale) Ordinance (the Ordinance) was passed by the Legislative Council on June 29, 2012, and was enacted on July 6, 2012. The objective of the Ordinance is to further enhance the transparency and fairness of the sales arrangements of first-hand residential properties and to enhance consumer protection. The Ordinance will come into operation in end of April 2013. The Transport and Housing Bureau (THB) is formulating a set of guidelines in relation to implementing the Ordinance. Also, the Sales of First-hand Residential Properties Authority to be set up under THB will start taking enforcement actions in end of April 2013. Under the Ordinance, information on floor area and price per square foot/metre of first-hand completed and uncompleted residential properties must be presented in SA only. Vendors who fail to comply with the relevant provisions in the Ordinance commit offences and are liable to a fine of $500,000.
Our reply to the two parts of the question raised by the Hon Frederick Fung is as follows -
(a) The EAA has been closely monitoring the implementation of the new requirement for estate agents to provide SA for second-hand residential properties. From January 1 to 18, 2013, the EAA conducted checks at around 350 estate agency shops. As regards the advertisements in newspapers and online advertisements, the EAA also conducted around 4 700 checks. The EAA found that the trade had generally complied with the relevant practice circular. That said, as at January 18, 2013, the EAA discovered 31 non-compliant cases and received six complaints. Investigations are being conducted. The EAA is also following up on suspected cases of non-compliance as reported in the media.
Since issuing the practice circular on provision of SA information for second-hand properties in May 2012, the EAA has been in close contact with the trade on the requirements through phone calls, SMS, emails, fax and educational visits to estate agency shops to explain to them relevant requirements and encourage the trade to get prepared for the new measures and reminded frontline practitioners of the requirements. The EAA also has organised seminars and focus group meetings on the subject with the frontline practitioners, uploaded a set of answers to the frequently asked questions onto the EAA's website and distributed posters and stickers for posting at the estate agency shops. The EAA has also stepped up promotion of the new requirements and the concept of SA to the public through media interviews, newspaper articles, roving exhibitions and an Announcement in Public Interest etc.
The public can find information on the SA of private domestic properties, excluding village houses, through the Property Information Online (PIO) of Rating and Valuation Department (RVD), at a fee of $9 per search. The service is operated on the established "cost-recovery, user-pay" charging principle. To enhance valuation transparency, RVD has, since November 2011, informed rates payers of newly-completed private domestic properties, excluding village houses, of the SA and ancillary accommodation of their properties at the time of issuing the Notices of Interim Valuation. RVD also plans to, from April 2013 onwards, provide rates payers of assessed private residential properties, excluding village houses, with the SA information of their properties through PIO free of charge.
(b) As I explained earlier, purchasers have had access to information on floor area and price per square foot/metre in SA for both first-hand and second-hand residential properties for quite a number of years. The EAA and the Consumer Council have reminded the public of the differences between SA and Gross Floor Area of a residential property. As such, there should not be confusion in the market. When the Ordinance comes into operation in end of April 2013, information on floor area and price per square foot/metre of first-hand residential properties must be presented in SA only. We believe that, gradually, the second-hand residential property market will also present floor area and price information predominantly in SA only.
Ends/Wednesday, January 23, 2013
Issued at HKT 13:09
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