The Consumer Council welcomes the Report of the Steering Committee on Regulation of the Sale of First-hand Residential Properties by Legislation ("Report"). The Council fully supports the introduction of the new legislation and the relevant provisions on the prohibition of misrepresentation and dissemination of false or misleading information in relation to the sale of first-hand residential properties.
The Council was invited to participate as a member of the Steering Committee which was set up in the wake of public disquiet over unfair sales practices. The Report has taken into account a number of suggestions put forward by the Council in various occasions, including the urge for new legislation to extend the scope of coverage of first-hand residential properties; recommendation for the establishment of an online property market information platform (PMIP), shortening of the lead time (from 5 days to 24 hours) for disclosing transaction information; as well as numerous discussions with stakeholders on issues such as standardization of area measurement, the use of unified price list template and the requirements on show flats and sales brochures.
Whilst appreciating the positive aspects in the Report, the Council considers that there are areas which require further consideration to sufficiently protect the interests of potential buyers.
Definition of First-hand Properties
In order to stem out uncertainty or room for manipulation, the Council states that it is essential to clearly define the term "first-hand" and the proposed exemption to be granted under the proposed legislation.
The Council considers the proposed legislation should include a guiding principle to cover "first-hand sale" of residential properties to "the general public", so as to deter developers to bypass the legislative control from putting up completed flats for lease initially, blocking sale to selected entities, or enticing potential buyers to make an offer to purchase.
Provision of Property Information
Information on flat prices
The Council supports using saleable area for quoting unit price as suggested by the Steering Committee. The provision of unit price of flats based on saleable area which is defined under the proposed legislation, serves as important and useful information for potential buyers.
For the sake of reducing possible confusion, the Council strongly urges the Government to step up consumer education to facilitate the public to get used to the adoption of saleable area for price comparison in the transitional period.
Disclosure of transaction information
The Report recommended that developers should disclose transaction information in the form of a Register within 24 hours after signing of a Preliminary Agreement for Sale and Purchase (PASP). Whilst supporting this proposal, the Council considers that information of current transaction prices and unit availability should be made available in real time on an online platform and sales offices for prospective purchasers to check before entering into an agreement with the developer.
In this regard, the Council welcomes that the Steering Committee has taken on board the Council's recommendation of establishing an online property market information platform (PMIP) to provide timely and accurate property information on the sales of first-hand residential developments for public access.
Sales Arrangements
Collection of deposits
To ensure better sales order and fairness to prospective buyers, the Council considers that no deposits or any consideration in connection with the reservation of units should be accepted before the sale of the respective units has formally commenced. As to the other option of specifying the cut-off date for collection of money not prior to the issuance of the price list, the Council worries that this may encourage more speculative activities and incite potential buyers to make rush purchase decisions.
In future, the Council expects that all types of first-hand property sales would be subject to the same set of requirements under the proposed legislation and the prevailing sale practices of "private sale" or "public sale" should no longer exist.
Percentage of forfeiture amount
The Council believes that, considering the high price of properties these days, a lower percentage of forfeiture amount (less than the proposed 5% of the purchase price) should be adopted if a buyer decides not to proceed with the purchase of a property within the time allowed. Reference can be made to Singapore and Australia where the forfeiture amount is relatively small.
The Proposed Enforcement Authority
The Council supports the establishment of an enforcement authority which should be empowered with a full range of investigatory powers to enable it to deal with malpractices in the sale of first-hand residential properties effectively.
A new enforcement agency is suggested by the Steering Committee to be established within the Government structure to facilitate the early implementation of the legislation. The Council is of the view that this enforcement agency should be transformed to an independent statutory body at the earliest possible time frame, so as to ensure its independence and credibility.
To ensure the deterring effects of the new legislation, the Council supports the inclusion of relevant provisions in making any fraudulent misrepresentation, or disseminating false or misleading information relating to the sale of first-hand residential properties a criminal offence.
The Council considers the above comments are proportionate in protecting consumers who are making what is likely to be the single most expensive purchase in their life.