Hong Kong property agents under the gun

Updated: 2015-01-30 06:48

By Agnes Lu in Hong Kong(HK Edition)

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The Estate Agents Authority (EAA) may require property agents to make a declaration if they intend to purchase homes in first-hand residential projects they represent.

"We will begin consultations among industry members very soon, but we believe there won't be major objections," EAA Chief Executive Officer William Leung Wing-cheung said on Thursday, adding he hoped that the requirement would be simple and easy to enforce.

The EAA said on Wednesday it had received 56 complaints concerning the sale of first-hand residential projects last year. Eleven of the complaints were related to making loans to prospective property buyers - up from only two in 2013.

Most new residential projects now hold computer balloting to decide the sequence for property buyers to select their ideal apartments. Under the method, each prospective purchaser is entitled, in most cases, to submit two ballots, meaning two registrations of intent with a deposit each.

Some projects, however, allow buyers to join others in submitting more ballots. For example, a couple can submit as many as six registrations of intent - two by the husband, two by the wife and two under their joint account.

Furthermore, property agencies would even prepare and offer cashier orders to lend to buyers, who undertake to pay back the company by credit card or check. But the money would not be redeemed unless and until the deal is confirmed.

Such lending practices will not only entice indecisive buyers to join ballot draws, but also present a grossly inflated market response to the public concerning the sale of the property, in one case by up to 20 times, according to a Consumer Council investigation last year.

The EAA said in one case last year, an agent was fined HK$5,000 for extending loans to prospective buyers, while his company was fined HK$60,000. The heaviest penalty could be a fine of HK$300,000 and revocation of the agent's license.

Leung reckoned that supervision and prevention of such lending practices should be the responsibility of consumers themselves, who should not be blinded by inflated balloting and project promotions.

"Consumers should make purchase decisions based on their financial status, and not through instigation by property agents or exaggerated commercials," he said. "At the same time, they should protect themselves as it's still technically hard to supervise developers and agents fully."

In May last year, more than 13,500 ballots were recorded for a new residential project - 22 times more than the number of units on offer.

Sammy Po Siu-ming, chief executive officer of the residential department at Midland Realty, said, however, the situation has improved recently, compared with last year which saw cases in which a family cast more than 50 ballots for only one apartment.

"Many projects have now scrapped balloting under joint accounts. So, each buyer can only submit two ballots," he said.

Po supported the EAA's plan requiring agents to declare if they want to submit their own ballots in projects they represent. "This will strengthen public transparency and keep the public well informed," he said.


(HK Edition 01/30/2015 page5)