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LCQ22: Implementation of the Residential Properties (First-hand Sales) Ordinance
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     Following is a question by the Hon Frederick Fung and a written reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (May 15):

Question:

     The Residential Properties (First-hand Sales) Ordinance (Cap. 621) (the Ordinance) has come into full operation with effect from April 29 this year.  The Ordinance aims to enhance the transparency and fairness of the sales arrangements and transactions of first-hand residential properties to better protect the interest of purchasers.  In this connection, will the Government inform this Council of the following since the Ordinance came into full operation:

(a) the respective numbers of sales brochures, price lists and documents on sales arrangements received by the Sales of First-hand Residential Properties Authority (SRPA); the number of inspections of the sales offices and show flats of first-hand residential properties conducted by SRPA officers; whether SRPA has uncovered any contraventions of the Ordinance in checking sales documents and conducting inspections; if it has, of the details;

(b) whether SRPA has received any complaints and enquiries about the sales of first-hand residential properties regulated under the Ordinance; if it has, of the number and contents of such complaints and enquiries; as it has been reported that the transaction process of first-hand residential properties is slower than before, and that some estate agents are suspected of contravening the Ordinance in conveying the information on residential developments to prospective buyers, whether SRPA has conducted any investigation into such cases; if it has, of the details; and

(c) the number of first-hand residential developments put up for sale in the market; of a comparison of the supply and transaction volume of first-hand residential units before and after the implementation of the Ordinance; whether the authorities have assessed if the quantity and transaction volume of first-hand residential properties to be put up for sale in the coming year will be affected by the implementation of the Ordinance; if they have, of the outcome?

Reply:

President,

     The Residential Properties (First-hand Sales) Ordinance (the Ordinance) aims to enhance the transparency and fairness of the sales arrangements and transactions of first-hand residential properties, enhance consumer protection, and provide a level playing field for vendors of first-hand residential properties.  The Ordinance has come into full implementation with effect from April 29, 2013.

     To ensure the Ordinance is implemented efficiently, the Transport and Housing Bureau has set up the Sales of First-hand Residential Properties Authority (SRPA).  The SRPA is established under section 86(1) of the Ordinance.  It commenced operation in early April 2013 to prepare for the full implementation of the Ordinance.  Preparations included issuing Guidelines and Practice Notes and preparing answers to some 90 Frequently Asked Questions (FAQs) on the Ordinance.  Also, the SRPA has organised nine rounds of workshops for the trade and held meetings with relevant stakeholders.  Beyond these, it has launched publicity and educational programmes.  

     My reply to the three parts of the question raised by the Hon Frederick Fung is as follows:

(a) As at May 13, 2013, the SRPA has received the first edition of three sales brochures, three sales brochures which have been examined by the SRPA and advice given to the vendors leading to revisions being made to the brochures, three price lists, three documents containing the sales arrangements, and two Registers of Transactions.  Three first-hand residential developments are involved.

     The SRPA has conducted compliance checks on all of the aforementioned documents.  The SRPA considers that the sales brochures, including the revised sales brochures, have generally complied with the requirements of the Ordinance.  That said, there is room for improvement on a few aspects in the first edition of the sales brochures.  For example, the measurements showing the internal and external dimensions of residential properties on the floor plans of residential properties can be more comprehensive.  Also, in the section on fittings, finishes and appliances, it is necessary to specify details such as the materials of fittings, equipment and water supply system in bathrooms, but not necessary to specify details such as the brand names and models of the fittings in bathrooms and kitchens.  The SRPA has given advice on the above not only to the vendors but also to all relevant stakeholders.

     The SRPA considers that the price lists, the documents containing the sales arrangements and the Registers of Transactions have generally complied with the requirements of the Ordinance.  That said, the vendor of one of the first-hand residential developments did not make available the blank Register of Transactions for inspection by the general public on the first day of sale as required by the Ordinance.  According to the Ordinance, a vendor must make available the Register of Transactions at the sales office and an electronic copy of the Register of Transactions on its designated website on each date of sale for inspection by the general public irrespective of whether there is transaction.  The SRPA has given advice on the above to the vendors and all relevant stakeholders.

     As at May 13, 2013, SRPA staff has conducted 15 visits to the sales offices of three first-hand residential developments and five visits to the show flats of the two first-hand residential developments which are being offered for sale.  The SRPA considers that the sales offices and show flats have generally complied with the requirements of the Ordinance.  That said, there is room for improvement on a few aspects.  For example, more notices can be displayed in the show flats to inform prospective purchasers that the internal dimensions of the show flats are slightly different from those as specified in the sales brochure because there are finishes on the walls in the show flats.  The SRPA has given advice on the above to the vendors and all relevant stakeholders.

     The SRPA is of the view that the aforementioned omissions or deficiencies made by the vendors are technical errors and do not involve serious contravention of the Ordinance.

     The SRPA places equal emphasis on prevention and enforcement.  On the prevention front, during the initial stage following the full implementation of the Ordinance, when the SRPA examines the sales brochures, price lists and other sales documents and visits the sales offices and show flats and has identified areas which vendors may easily make careless mistakes, it will issue reminders to the trade through the SRPA website and the Real Estate Developers Association of Hong Kong to draw vendors' attention to the issues identified as problematic or where improvements can be made so that the latter will not make the same mistakes in future.  In this regard, the SRPA has issued reminders to the trade on the aforementioned issues.  The SRPA observed that the vendors concerned had responded quickly to amend the sales brochures and show flats in accordance with the advice given.
 
(b) Between the period from early April 2013 when the SRPA has commenced operation and May 13, 2013, the SRPA has received 278 enquiries.  144 of them were received on or before April 28, 2013, and the remaining 134 enquiries were received on or after April 29, 2013 when the Ordinance came into full implementation.  The enquiries were made by vendors, stakeholders relating to the sales of first-hand residential properties such as conveyancing solicitors and authorised persons, and members of the public.  The enquiries are diversified in nature, including the application of the Ordinance, the purview of SRPA, the interpretation of specific provisions of the Ordinance, and how individual first-hand residential developments may comply with the Ordinance.

     As at May 13, 2013, the SRPA has received a complaint on the websites of two first-hand residential developments which have yet to make available sales brochures, price lists and the document containing the sales arrangements.  The SRPA has completed the investigation on the complaint.  The SRPA considers that the two websites which are the subjects of the complaint have not contravened the Ordinance, including the requirements of the Ordinance on advertisements.  The Ordinance does not require that vendors must make available the sales brochures, price lists and/or the documents containing the sales arrangements before promoting a first-hand residential development.  However, an advertisement which purports to promote the sales of first-hand residential properties must comply with the requirements of the Ordinance on advertisements.  The SRPA has informed the complainant of the investigation outcome.

     Also, the media has informed the SRPA of two suspected cases which may have been in breach of the Ordinance.  In one of the cases, it is alleged that an estate agent may have breached the Ordinance when providing information on a residential development.  For the other case, it is alleged that the vendor may have breached the Ordinance in the sales of residential properties in a first-hand residential development which comprises more than one building and the building works were issued certificates of exemption under section 5(a) of the Buildings Ordinance (Application to the New Territories) Ordinance, Cap 121.  The SRPA is following up on both cases.  Also, the Estate Agents Authority is following up on the case involving an estate agent.  

     If at any stage of the investigation on the aforementioned two cases, the SRPA considers that the suspected contravention of the Ordinance is of a severe nature and may affect the interest of prospective purchasers, it will make public the details of the contravention without causing prejudice to the legal proceedings.

(c) For the period from April 29, 2013 when the Ordinance comes into full implementation to May 13, 2013, there were 176 first-hand residential properties in the two first-hand residential developments being offered for sale.  According to the information in the Registers of Transactions of the two first-hand residential developments, as at May 13, 2013, there were 42 Preliminary Agreements for Sales and Purchase being entered into.  33 of them have entered into Agreements for Sales and Purchase.

     Hong Kong developers are quick to adapt to changes.  We believe that they are fully adapting to the Ordinance and will offer new residential developments and resume the sales of the remaining stock of first-hand residential properties in an orderly manner.  If necessary, the SRPA will issue further FAQs and reminders to the trade, to facilitate vendors to comply with the requirements of the Ordinance.  It is however important to bear in mind that it is the business decision of individual vendors as to when to offer their first-hand residential properties for sale.

     The development of the local private residential property market is affected by many factors, including the performance of the macro-economy, the prospect of the local economy, interest rates, and the sentiment of local and external investors.  Supply of private residential properties in Hong Kong comes from both first and second hand residential properties.  In the past four years (i.e. 2009 to 2012), transactions of first-hand residential properties account for an average of about 13% of the total number of transactions of private residential properties in Hong Kong whereas the transactions of second-hand residential properties account for the remaining about 87% on average.

Ends/Wednesday, May 15, 2013
Issued at HKT 16:06

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