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Following is a question by the Hon Regina Ip and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (January 20):
Question:
Some estate agents have told me that with the uncertain economic outlook of Hong Kong and the onset of a cycle of rising interest rates, the transactions of private residential units have continued to shrink recently. Moreover, in order to promote the sale of their stock, some real estate developers (developers) have one after another brought down the prices of the units for sale but at the same time requested estate agents to reduce their commissions so as to make up for some of the losses. Amid the double blows of low transaction volume and reduction of commissions, the incomes of estate agents have been substantially reduced and very unstable, and the living of estate agents has therefore become more and more difficult. In this connection, will the Government inform this Council:
(1) whether it has collected information on the various types of commissions received by estate agents expressed as percentages of property prices; if it has, of the respective average percentages in each of the past three years, and how such percentages compare to the relevant figures of overseas countries; if not, the reasons for that;
(2) whether it has looked into the situation of developers requesting estate agents to reduce their commissions; if it has, of the details; if not, the reasons for that;
(3) whether it has plans to impose regulation on the practice of developers requesting estate agents to reduce their commissions; if it does, of the details; if not, the reasons for that; and
(4) whether it will, by making reference to the practices of some countries (e.g. the United States and Canada), legislate to stipulate the levels of the various types of commissions to be received by estate agents, so as to ensure a reasonable return for the work of estate agents; if it will, of the details; if not, the reasons for that, and the means through which the authorities can ensure a reasonable return for the work of estate agents?
Reply:
President,
My reply to the questions raised by the Hon Regina Ip is as follows:
(1) The Estate Agents Authority (EAA) is a statutory body set up under the Estate Agents Ordinance (Cap. 511) (the Ordinance). Its main functions include regulating the estate agency trade for protection of consumer interests. The amount or the rate of commission of estate agents is not prescribed under the Ordinance. The actual amount of commission received by the estate agents is their commercial and operational information, which is outside the remit of the EAA. The EAA has not collected such information.
(2) The EAA has been maintaining communication with the estate agency trade through different channels, such as, regular trade liaison meetings and focus group meetings. The EAA has not heard of developers asking estate agents to reduce their commission.
(3) and (4) Hong Kong is a free market economy. Estate agents are free to negotiate with their clients (including both the developers and the consumers) on the amount or the rate of commission having regard to various factors, such as, the demand and supply in the market and the actual circumstances of individual transactions. This arrangement is more flexible and facilitates the conclusion of the agreement on the sale and purchase of properties among all parties concerned. The Government has no plan to regulate the commission of estate agents.
Ends/Wednesday, January 20, 2016
Issued at HKT 12:36
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