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HONG KONG, April 25, 2013 /PRNewswire/ -- RICS (Royal Institution of Chartered Surveyors) expressed its support to the imminent implementation of the Residential Properties (First-hand Sales) Ordinance with constant review on the practice notes, guidelines and FAQs, issued by the Sales of First-hand Residential Properties Authority (SFRPA), for preserving consumers' right in a fair and transparent sales practice without ignoring some practical difficulties imposed by the guidelines, practice notes and FAQs. RICS submitted its opinions to the Government last year and RICS is glad to see that most of the recommendations of the submission were incorporated in this new Ordinance. The Ordinance is expected to be a step forward in protecting the rights and interests of consumers. RICS also recommends that the Government maintain clear and open channels of communication with the industry at all times in order to fix any potential inadequacies or problems that may arise. RICS will offer their full cooperation, and provide the Government with professional advice.
Regarding the content of the Ordinance, RICS expressed the following views:
It is stipulated that the sales brochure of a first-hand property is required to show every street, building, facility or structure that is situated within 250 metres from the boundary of the project. Under the FAQs issued by SFRPA, vendors are required to make "field trips" to ascertain the use in the building, facility or structure with update for every 3 months. RICS supports the good intent to improve a potential purchasers' knowledge about the surrounding environment, as this knowledge may have a direct effect on their purchasing decisions. Although this will likely cause an increase of brochure production costs for developers, it will increase transparency where a purchaser can be aware of changes in the surrounding environment. However, vendors, in general are private practices without the authority to gain access to the buildings of private ownership, common areas managed by property manager or private areas in exclusive use by occupants/users. When determining use of a building, facility and structure, RICS recommends fairness should be the guiding principle, as developers are not empowered examine uses of flats.
Under the Ordinance, the vendor is required to make public the price list at least three working days before the sale commences and release the relevant information on the designated websites. RICS believes that this regulation protects prospective buyers and keeps them up to date on the latest developments. More importantly, the new regulations prohibit the vendor from seeking any general or specific expression of intent from any other person on the specified residential property, and the vendor must reject such kind of intent before the availability of the price list and before the first date of sale. RICS supports these regulations, as they safeguard the consumers' interests by preventing the vendor from changing an unpublished price on the list based on privately stated expressions of intent, thus ensuring transparency and fair public access to information.
In addition, the vendor must, within 1 working day after the owner enters into a preliminary agreement for sale and purchase, make the key particulars of the contractual terms in the preliminary agreement available for public free of charge. RICS supports this regulation as it provides prospective buyers a clearer understanding of the market conditions, thus enabling them to make more informed decisions on home ownership. During any stage of the entire sales process, it will be identified as a criminal offence for an individual such as the seller or real estate agent to engage in misrepresentation or misleading information for the purpose of inducing another person to purchase any specified residential property. RICS supports this as it protects the interests of consumers, but acknowledges that there may still be some deficiencies or grey areas not identified in the Ordinance, and that amendments might be called for after the new sales practice has been implemented for a certain period, say, one year. This can avoid misuse of the Ordinance caused by cancellation of transactions by consumers, particularly in a market downturn.
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Regarding the statement of connected transactions and relations of participating parties in a project, RICS finds it hard to implement. The new Ordinance stipulates that a developer has to announce within 24 hours after the completion of a connected transaction, where this applies to shareholders, staff members and their immediate family members of holding companies owned by the developer. The coverage is not only on the subsidiary companies, but also associated companies, i.e., the shareholding ranging from 21% to 50%. RICS is of the view that the applicability of connected transactions is too wide that developers or regulatory bodies may have difficulties defining connected transactions. The Government is advised to define a suitable coverage to protect the interests of consumers with realistic and practical regulations for developers. As for declaring the relations of participating parties, namely, vendor, building contractor, lawyer and authorized person, in a project, the same principle should be applied to companies in connection with developer.
RICS had previously suggested a tenancy of at least a potential 3-year term tenancy for the property as to be excluded from the legislation. However, it has been enacted that a tenancy of a 1-year fixed term is acceptable for the exclusion from being considered first-hand property. RICS welcomes this, and ultimately concludes that this term has fully taken both the interests and rights of consumers and developers into account.
Andrew Lee, Chairman of Residential Professional Group Committee, RICS Hong Kong, said, "as it stands, the new regulations will be implemented on the 29th of this month. RICS fully supports the new regulations as they protect the interests and rights of prospective buyers. At the same time, the Ordinance offers the appropriate level of sales regulation required to foster healthy long-term development of the Hong Kong property market. It should also be said, however, that in practice, the Ordinance will likely need to be adjusted from time to time to meet the demands of an ever-changing market, and as such it is crucial for the Government to maintain constant communication with the industry. It is widely believed that buying a home is considered one of the most important investments in a Hong Kong citizen's lifetime, and in this regard everyone should give all of their effort to ensure that the public interest is well-protected."
About RICS & RICS Asia
RICS is the world's leading qualification when it comes to professional standards in land, property and construction. In a world where more and more people, governments, banks and commercial organisations demand greater certainty of professional standards and ethics, attaining RICS status is the recognised mark of property professionalism.
Over 100,000 property professionals working in the major established and emerging economies of the world have already recognised the importance of securing RICS status by becoming members.
RICS is an independent professional body that since 1868, has been committed to setting and upholding the highest standards of excellence and integrity - providing impartial, authoritative advice on key issues affecting businesses and society. RICS is a regulator of both its individual members and firms enabling it to maintain the highest standards and providing the basis for unparalleled client confidence in the sector.
The RICS Asia supports a network of over 11,000 individual professionals across the Asia Pacific region with an objective to help develop the property and construction markets in these countries, by introducing professional standards, best practice and international experience. It promotes RICS and its members as the natural advisors on all property matters. It also ensures that services and career development opportunities are provided to members.
The RICS Asia region covers national associations and local groups locating in Brunei, Malaysia, Singapore, Thailand, The People's Republic of China and the SAR Hong Kong. It also has members working across the region such as Bangladesh, Bhutan, Burma/Myanmar, Cambodia, Indonesia, Japan, Kiribati, Laos PDR, Macao, Mongolia, Nepal, North Korea, South Korea, Taiwan region, The Maldives, The Philippines, Timor East and Vietnam. For more information, please visit: www.ricsasia.org
