LCQ4: The sale of overseas properties in Hong Kong
Recently, some members of the public sought my assistance, saying that they had bought, from a developer of the United Kingdom (UK) through a registered estate agent of Hong Kong in a property fair held in Hong Kong in 2015, a number of uncompleted housing units involving a total of five development projects, all of which had subsequently gone "failed". It has been reported that over 200 Hong Kong people have suffered financial losses totalling hundreds of millions of Hong Kong dollars. In this connection, will the Government inform this Council:
(1) of the current legislation and codes of practice to be observed by registered estate agents of Hong Kong in promoting completed or uncompleted overseas properties in Hong Kong; whether it has assessed if such legislation and codes of practice are sufficient to safeguard the rights and interests of Hong Kong buyers; whether the practices and processes adopted by estate agents in promoting those properties are subject to regulation; if so, of the details; if not, whether it will consider establishing a mechanism to regulate such practices and processes;
(2) as it has been reported that similar incidents of failed development projects of UK occurred in 2012, 2014 and 2016, whether the Government has so far discussed with the relevant UK departments ways to render assistance to those buyers outside UK who have suffered losses, and the establishment of a mechanism to safeguard the rights and interests of that type of buyers; and
(3) given that it has become increasingly common for Hong Kong people to buy properties overseas in recent years and, due to the huge costs and excessively long time involved as well as a lack of the relevant knowledge, it is often difficult for them to travel overseas to seek compensation when their rights and interests have been undermined, whether the Government will, apart from carrying out public education, consider reviewing the relevant policy with a view to establishing a mechanism to enhance the protection for the rights and interests of Hong Kong people?
Having consulted the Security Bureau and the Estate Agents Authority (EAA), I set out my consolidated reply to various parts of the question raised by the Hon Chan Han-pan as follows:
(1) 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 agent licensees must comply with the EAO and its subsidiary legislation. They should also comply with the Code of Ethics and practice circulars issued by the EAA. Licensees who fail to observe and comply with the Code of Ethics and practice circulars may be considered not a fit and proper person to hold the licence under the EAO. This may in turn affect their eligibility to hold or continue to hold their licences. They may also be subject to disciplinary action.
The EAA has all along attached great importance to the conduct of estate agent licensees. According to the Code of Ethics promulgated by the EAA, estate agents and salespersons shall, in the course of business, provide services to clients with honesty, fidelity and integrity. They should protect their clients against fraud, misrepresentation or any unethical practices in connection with real estate transactions. If a licensee is suspected of breaching the above codes in the course of the sale of properties, regardless of whether the properties concerned are local or non-local, the EAA will investigate the matter and determine whether disciplinary action should be taken depending on the investigation result.
(2) Police have been committed to combating various types of deception, and raising via different channels public awareness against various types of deception. On the incident where some members of the public are suspected to have been cheated in purchasing uncompleted housing units from a developer of the United Kingdom (UK) in 2015 as mentioned in the Hon Chan's question, the Police have so far received reports from 35 members of the public. These cases, classified as "Request for police investigation", have been passed to the Commercial Crime Bureau for follow up, and are still under investigation. As in other cases involving cross-boundary crimes, the Police will conduct intelligence exchange and seek cooperation with relevant overseas law enforcement agencies. For the above cases, Police have, through INTERPOL, passed the case information to the relevant UK law enforcement agencies for follow up.
(3) Regulation of sale of non-local properties in Hong Kong involves complicated issues and requires careful deliberation. The Government consulted the EAA on this subject matter in the past. The EAA advises that there may be substantial difference between the sale of properties situated outside Hong Kong and those located in Hong Kong from both the perspectives of market operation and conduct regulation. Besides, as sale of non-local properties involves laws and regulations and tax regimes of different jurisdictions, as well as various stakeholders (e.g. non-local developers, intermediaries and agents), the issues concerned are rather complicated and extensive. In addition, with the advancement of information technology, vendors of non-local properties can now carry out sale and promotional activities easily through the Internet, thereby increasing difficulties in law enforcement.
In light of the above, the Government considers that enhancing public education, with a view to reminding investors and the public alike the risks involved and the issues that they need to pay attention to in purchasing non-local properties (especially uncompleted properties), should be a more effective way. The EAA has all along been putting much efforts in educating the public. It has from time to time reminded consumers of the issues that they need to pay attention before making the decisions to purchase non-local properties through news articles, publications and other media. The Consumer Council has also published articles in its publications to remind consumers to pay attention to the risks in purchasing non-local properties.
Apart from enhancing public education, the EAA has also reminded estate agent licensees to exercise extra care in handling sale of non-local properties and refrain from providing misleading information to purchasers. The EAA is in the course of preparing a set of guidelines for issue later this year to remind the estate agents and salespersons of the matters they need to comply with and pay attention to in handling the sale of uncompleted properties situated outside Hong Kong.
According to the information provided by the EAA and the Consumer Council, the number of complaints relating to the sale of non-local residential properties in Hong Kong remains at a low level in recent years. In the past three years (i.e. from 2014 to 2016), the EAA and the Consumer Council have respectively received 10 and 13 complaints on average per year on the sale of non-local residential properties. This indicates the effectiveness of enhancing education for the public and the licensees.
Ends/Wednesday, November 22, 2017
Issued at HKT 13:15
Issued at HKT 13:15