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Following is a question by the Hon Frederick FUNG and a written reply by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in the Legislative Council today (November 16):
Question:
It has been reported that a consultancy firm's has pointed out that the transparency in Hong Kong's property market is inadequate and property developers tend to exaggerate the floor areas of the properties put up for sale and vigorously create an impression that the market is in dire demand for properties. In this connection, will the Government inform this Council whether it:
(a) has studied and followed up the above claims; if so, of the results;
(b) has assessed if the self-regulatory mechanism currently adopted by the Real Estate Developers Association of Hong Kong for governing the sale of uncompleted residential properties ("URPs") by its members can ensure that the sales brochures provide comprehensive and accurate information about the properties put up for sale, such as the saleable floor areas calculated in a uniform way and the planned land uses of the adjacent sites; if so, of the assessment results; and
(c) will re-consider regulating the sales descriptions of URPs by way of legislation; if not, of the measures it will adopt to safeguard the interests of potential buyers?
Reply:
Madam President,
In order to enable prospective property purchasers to get hold of adequate and accurate information, the Real Estate Developers Association of Hong Kong (REDA), at the request of the Administration, announced in June 2001 a self-regulatory regime which requires its members to comply with guidelines issued by REDA when selling uncompleted residential units. The guidelines require developers to include in sales brochures a variety of information about the development offered for sale, including a location plan showing nearby communal facilities, an Outline Zoning Plan showing nearby existing and planned land use, saleable area and gross floor area of units, etc. The guidelines also clearly set out standardised methods for calculation of the saleable area and gross floor area of residential properties. The Administration has been monitoring through different means the operation of the self-regulatory regime, assessing its effectiveness as well as keeping watch on public views towards the regime.
My reply to the three-part question is as follows:
(a) The Administration has expressed concerns to REDA about recent allegations of developers providing exaggerated information to portray a buoyant market. The Administration agrees with some recent reports that there is room for improvements in the sale arrangements, and has conveyed to REDA such concerns. REDA has agreed to step up monitoring and remind its members of the need to comply with the guidelines to ensure that the regime can meet the changing needs of the market and consumers. All along, the Administration has conveyed the public's views on private sale arrangements to REDA, and REDA has responded positively. For instance, REDA announced on June 24 this year a set of refined guidelines asking developers to enhance transparency in private sales and to release accurate sales figures.
(b) Sale arrangements (including information provided in sales brochures) have improved noticeably since the promulgation of the new guidelines. We have received only one complaint about developers, in respect of which we have taken follow-up actions. The complainant has not made further enquiry thereafter. We believe the self-regulatory regime on the whole is working satisfactorily. The Administration, together with the Consumer Council and the Estate Agents Authority (EAA), meet regularly with REDA to ensure the effective operation of the regime and to reflect public views on sale arrangements to REDA, in order to make improvements on an on-going basis.
(c) The Administration adopts a three-pronged approach to monitor and assess the operation of the regime. Apart from reminding REDA to enforce the guidelines strictly, the Administration has also invited the Consumer Council to step up consumer education on the protection of consumers' rights in property transactions and has requested EAA to issue updated circulars, step up enforcement action and remind estate agents to conduct their business at sales offices in accordance with the law. The Consumer Council and EAA are also jointly providing pamphlets at sales offices to remind prospective purchasers of information they should pay attention to. The Administration believes that the existing three-pronged approach, together with the general public's scrutiny, can on the one hand protect consumers¡¦ interest and would not fetter market operation on the other. Such arrangements offer greater flexibility than does regulation by way of legislation, and allow timely adjustments to cope with changes in market circumstances and consumers' expectations. In this regard, the Administration will not, at the moment, consider regulating sale arrangements by way of legislation, but will, together with the Consumer Council, EAA and REDA, continue to closely monitor the operation of the self-regulatory regime and assess its effectiveness so as to ensure that REDA's guidelines can really meet the need of consumers and the real estate sector.
Ends/Wednesday, November 16, 2005
Issued at HKT 12:58
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