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The Director, Sales of First-hand Residential Properties Authority (SRPA), Mr Eugene Fung, today (April 29) said that the Residential Properties (First-hand Sales) Ordinance (the Ordinance) had been implemented smoothly in the past year and was effective in enhancing the transparency, fairness and order of the sales of first-hand residential properties.
Mr Fung also advised developers to cherish the freedom they were given under the Ordinance to make business decisions flexibly, and not to abuse that freedom by adopting sales arrangements which would cause public resentment.
He told the media that most developers had got used to the requirements of the Ordinance and had made efforts to avoid mistakes. However, he said various recent sales tactics by individual developers must not be encouraged. Examples include:
- Scheduling the "internal sale" session or "sale to bulk purchasers" session on the same day as the sale session for other prospective purchasers, when the residential properties being offered for sale in all sessions are in fact the same. This arrangement makes it difficult for other prospective purchasers to get to know beforehand the number of residential properties available for sale to them and what they are, unless there is sufficient time after the "internal sale" session or "sale to bulk purchasers" session for the developer to inform other purchasers of the information.
- Setting a lower price for a residential property for promotional purposes but not offering to sell the residential property at that price, and offering the property for sale at an increased price afterwards.
"The SRPA considers the aforementioned sales tactics will only bring about an adverse effect as prospective purchasers may feel they are being fooled. Such sales tactics may damage the developers' image," Mr Fung said.
"On the one hand, the Ordinance enhances the transparency and fairness of sales of first-hand residential properties. On the other hand, the Ordinance takes into account that vendors have the right to legally dispose of their assets and make business decisions. The Ordinance strikes a balance between the two. The Ordinance does not prescribe categorically the types of sales arrangements which vendors must deploy. Rather, it requires vendors to set out the details of the sales arrangements. This is not a loophole in the Ordinance," he stressed.
From the implementation of the Ordinance on April 29, 2013 until April 28, 2014, the SRPA has examined about 330 sales brochures (including revised sales brochures), about 670 price lists, 400 documents containing sales arrangements, and 2 600 printed advertisements. Also, the SRPA has conducted 940 inspections of registers of transactions, and 850 inspections of show flats and sales offices.
The SRPA carried out investigations on suspected contraventions of the Ordinance as identified during compliance checks and inspections, and in response to complaints and media enquiries. The SRPA has been forwarding the investigation outcome of offences under the Ordinance, together with the SRPA's recommendation and justifications on whether or not to initiate prosecutions for each offence, to the Prosecutions Division of the Department of Justice for consideration.
The SRPA drew the attention of prospective purchasers from time to time to point out issues of concern to them. For example, the SRPA advised prospective purchasers to ascertain whether or not the property which they wished to purchase would be installed with fixed windows, and to conduct a site visit to see the surrounding area of a development.
Mr Fung also offered the following advice to prospective purchasers:
- Increasingly, developments label an area as a "flat roof" in the approved building plans and the sales brochures, whereas such an area may conventionally be known as a "roof". Prospective purchasers are advised to take note of the usage of those areas if the properties which they purchase include areas labeled as a "roof" or a "flat roof".
- Prospective purchasers are advised to always look at the section on "relevant information" when reading a sales brochure on a development. Vendors are required to set out in that section information on any matter which is known to the vendor but is not known to the general public and is likely to materially affect the enjoyment of the residential property.
The sales brochure is an important source of information on a development for prospective purchasers. Given the diversity in the design of individual floors and residential properties in a development nowadays, it is inevitable that a sales brochure will contain a lot of information. It is inadvisable for prospective purchasers to avoid making reference to a sales brochure because of its volume.
Looking ahead, Mr Fung said that the SRPA would continue to step up its efforts to conduct compliance checks, handle complaints, carry out investigations and educate the trade and the public, with a view to further enhancing the transparency and fairness of the sales of first-hand residential properties, strengthening consumer protection, and providing a level playing field for vendors of first-hand residential properties.
Ends/Tuesday, April 29, 2014
Issued at HKT 17:00
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