LCQ 21: Regulating activities on the sale in Hong Kong of properties outside Hong Kong
**************************************************************************************
Question:
It has been reported that with an increasing number of activities on the sale in Hong Kong of properties outside Hong Kong (POH) in recent years, the number of dispute cases that have arisen as a result of Hong Kong buyers suspecting themselves to have been misled in the process has been continuously on the rise, and suspected deception cases have even occurred. In this connection, will the Government inform this Council:
(1) as it is learnt that in recent years, disputes have arisen as a result of some Hong Kong buyers suspecting themselves to have been misled in the aforesaid sales activities (including properties in Zhongshan and Zhuhai Hengqin Free Trade Zone on the Mainland, the United Kingdom, Japan and the Southeast Asian region), and Hong Kong estate agents are even suspected to have been involved in some of the cases, whether the Estate Agents Authority and government departments such as the Customs and Excise Department and the Hong Kong Police Force have conducted specific investigations and taken law enforcement actions in respect of such cases, and the relevant progress;
(2) whether it will consider enacting legislation to require that activities on the sale in Hong Kong of POH (including placing advertisements, holding sales exhibitions, liaising with sellers outside Hong Kong on behalf of buyers, and organizing visits) must be undertaken through Hong Kong's licensed estate agents; if so, of the details and timetable; if not, the reasons for that; and
(3) whether, in respect of POH which have more problems in the aforesaid sales activities, the Government will strengthen cooperation with the authorities of the regions concerned, such as enhancing cooperation in information exchange and regulation; if so, of the details and timetable; if not, the reasons for that?
Reply:
President,
According to the Estate Agents (Exemption from Licensing) Order (Cap. 511B), a person shall be exempted from the requirement for obtaining an estate agent's licence if he/she handles exclusively properties outside Hong Kong (POH); and states in all his/her documents (including pamphlets and brochures, etc.) and advertisement that he/she is not licensed to deal with any property situated in Hong Kong. However, if the company or individual concerned performs estate agency work for properties both within and outside Hong Kong, that company/individual is required to obtain a licence issued by the Estate Agents Authority (EAA) and be regulated by the EAA. Moreover, the EAA issued a practice circular in December 2017 to provide guidelines on the appropriate practices and measures to be adopted in handling the sale of uncompleted POH for estate agent licensees to comply with. These practices and measures include, amongst others, due diligence measures and requirement on providing important sales documents. The guidelines have taken effect since April 1, 2018. Licensees who breach the guidelines may be subject to disciplinary actions from the EAA.
Having consulted the Commerce and Economic Development Bureau, the Constitutional and Mainland Affairs Bureau (CMAB), the Financial Services and the Treasury Bureau, the Security Bureau and the EAA, the reply to the question raised by the Hon Luk Chung-hung is set out below:
(1) If a licensed estate agent/salesperson is suspected of breaching the Code of Ethics and practice circulars issued by the EAA in the course of the sale of POH, the EAA will investigate into the matter. Moreover, the Police, the Customs and Excise Department (C&ED) and the Securities and Futures Commission (SFC) have all along conducted investigations and taken enforcement on complaints or cases involving POH under their respective purview. The Police will handle requests for assistance involving non-local property investment deception; C&ED will handle cases with possible offence under the Trade Descriptions Ordinance (Cap. 362); and the SFC will handle complaints which involve collective investment schemes with non-local real estates. Relevant departments and organisations have conducted/are conducting investigations and have taken/are taking appropriate follow-up actions on the cases.
(2) Any attempt to restrict the sales of POH in Hong Kong through licensed estate agents only will act contrary to the principle of free trade. Apart from the impact on vendors/developers, consumers in Hong Kong will also be deprived of their very basic right to purchase POH direct from the vendors/developers. Moreover, vendors/developers of POH can easily conduct sales and promotional activities online, by post sent from abroad or through other means nowadays. Having regard to the constraints of legal jurisdiction, we consider that such kind of legislative regulatory measure will not be effective.
(3) The EAA has been exchanging information and cooperating with its non-local counterparts as needed. Furthermore, the Housing Bureau has been communicating closely with the EAA, and would refer to the CMAB cases that may involve real estate developers or agents in the Mainland as found out by the EAA during its investigation of cases. The CMAB may then refer the cases to the Mainland authorities timely.
In addition, one of the main functions of the five Mainland Offices of the Hong Kong Special Administrative Region Government (namely the Beijing Office and the Hong Kong Economic and Trade Offices in Guangdong, Chengdu, Shanghai and Wuhan) is to provide assistance to Hong Kong residents in distress in the Mainland. If the Hong Kong residents seeking assistance wish to complain or appeal to the Mainland authorities on Mainland properties, the Mainland Offices will refer their cases to the relevant Mainland authorities as requested.
Ends/Wednesday, July 6, 2022
Issued at HKT 14:25
Issued at HKT 14:25
NNNN