LCQ8: Regulation of sale of commercial properties
In 2016, the Estate Agents Authority received 156 complaints relating to properties other than local residential properties, an upsurge of 184 per cent compared to the 55 cases in 2015. "Providing inaccurate or misleading property information" was mostly quoted as a cause for lodging the complaints. For example, the actual layouts and sizes of units in a shopping mall turned out to be vastly different from what the buyers had envisaged based on the relevant layout plans. Moreover, some buyers have pointed out that there is no provision in the Estate Agents Ordinance (Cap. 511) for regulating and monitoring the sale of commercial properties. In this connection, will the Government inform this Council:
(1) of the government departments and public bodies responsible for handling complaints about the sale of commercial properties, and their respective responsibilities; the number of such complaints they received in each of the past five years and, among them, the number of those in which the property transactions involved were eventually terminated after the complaints had been found substantiated;
(2) of the various types of assistance offered to buyers of commercial properties by the various government departments and public bodies; whether the authorities will consider designating a government department or public body to be solely responsible for offering such assistance to buyers; if so, of the details; if not, the reasons for that; and
(3) given that buyers may be disadvantaged by information asymmetry during the transaction process for commercial properties, of the measures put in place by the authorities to help buyers understand the terms and conditions relevant to the transactions, so as to avoid misunderstanding between buyers and sellers?
Based on the information from the Estate Agents Authority (EAA) and the Lands Department, my reply to the question raised by the Hon Abraham Shek is as follows.
The Estate Agents Ordinance (EAO) (Cap. 511) provides for the establishment of the EAA, as well as the licensing and regulation of the estate agency trade. Estate agents and salespersons must observe and comply with the relevant provisions in the EAO and its subsidiary legislation when they handle the sale and purchase of local properties. They should also comply with the Code of Ethics and the guidelines set out in the practice circulars issued by the EAA. Estate agents and salespersons who fail to do so may be subject to disciplinary action by the EAA.
According to the Code of Ethics, estate agents and salespersons, in engaging and accepting an appointment as an agent, should protect and promote the interests of their clients. They should provide services to clients with honesty, fidelity and integrity. They should also protect their clients against fraud, misrepresentation or any unethical practices in connection with real estate transactions. Regardless of whether the properties concerned are residential or non-residential, estate agents and salespersons should comply with the above requirements.
With a view to providing the estate agents and salespersons with further guidance, the EAA is in the course of preparing a new practice circular that sets out guidelines on important issues pertaining to the proper practice in handling the sale and purchase or leasing of non-residential properties. Subject to consultation with the estate agency trade, the EAA plans to issue the new practice circular in July 2017, which will come into effect on October 1 ,2017.
The number of complaints received by the EAA in relation to commercial properties (including shopping mall, street-level shop and office) in the past five years is set out in the following table:
|No. of complaints||55||65||37||29||84|
Among the 84 complaints received in 2016, 53 of them were related to the selling of units in the same shopping mall. The EAA does not have figures on the number of property transactions that were terminated after the complaints had been found substantiated.
Separately, for property development that falls under the Lands Department Consent Scheme (the Consent Scheme), the sale of uncompleted units therein (including both residential and non-residential units) has to comply with the relevant requirements set out under the Consent Scheme. For the sale of uncompleted non-residential units, the requirements include making available sales brochure and a price list of all the units offered for sale at any one time to the public; disclosing in the sales brochure the property information as required (e.g. location plan, layout plan, floor plan, schedule of unit size, etc); and disclosing to the public in advertisements and sales brochure the names of the parties involved in the development (e.g. the developer and its holding company, the authorised person and building contractor for the development, etc).
The Lands Department has not received any complaints in relation to the sale of uncompleted non-residential units under the Consent Scheme in the past five years.
The EAA, as a statutory body established under the EAO, will continue with its work in regulating the practice of estate agency in Hong Kong while the Lands Department will regulate the sale of uncompleted properties under its Consent Scheme, with a view to protecting the interests of property buyers. We consider the current mechanism appropriate and do not consider it necessary to designate a specific body to carry out these duties.
Ends/Wednesday, July 5, 2017
Issued at HKT 11:55
Issued at HKT 11:55