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Purchase of Properties Outside Hong Kong - A Study on Enhancing Consumer Protection

  • Study Report
  • 2021.10.28

Download PDFFull Report   Download PDFExecutive Summary  Download PDFPresentation 

The purchase of properties outside Hong Kong (“POH”) is popular among Hong Kong consumers in recent years as evidenced by the increase in the number of advertisements through various channels.  Although the Estate Agents Ordinance, Cap 511 (“EAO”) was enacted in 1997, legislative priority was accorded to the regulation of estate agency work in relation to local properties at the time.  Therefore, notwithstanding the original legislative intent for the EAO to cover the sale of POH, this area remains largely unregulated due to the introduction of the Estate Agents (Exemption from Licensing) Order, Cap 511B, which allows estate agents and salespersons who deal exclusively with POH to be exempted from obtaining a licence on the condition that they state in all sales documents that they are unlicensed. 


Through a comprehensive research methodology, including analysis into 261 complaint cases, advertisements survey on 1314 advertisements collected, mystery visits to 36 projects, in-depth interviews with relevant authorities and stakeholders and benchmarking regulatory regimes in 7 other jurisdictions, the Consumer Council ("Council") concluded that there is much room for improvement in the regulation of POH.  In considering the significant detriment to consumers and malpractices found in the marketplace, 5 key areas of concern have been identified by the Council as follows:


  1. Lack of licensing requirements for certain estate agents and vendors;
  2. No cooling-off period for deposits, reservation fees or deposit protection mechanisms in place;
  3. Insufficient regulation of advertisements;
  4. Insufficient regulation of other trade practices; and
  5. Partial commencement of the EAO.

It can be understood that the issues and possible risks involved in POH are very complex and therefore, it is even more important for consumers to gather accurate and comprehensive information, together with sufficient warnings given in advance so that they can make an informed choice.  In striking a balance between enhancing consumer protection and sustainable development of the estate agents market in POH, the Council, having thoroughly considered stakeholders’ views and concerns, and based on the findings of the report, puts forward the following 5 recommendations for enhancing consumer protection in the POH market.


  1. To require all estate agents who engage in the sale of first-hand residential POH to be licensed under the EAO, i.e. all agents/salespersons who deal with the sales of first-hand residential POH be mandated to obtain a licence under the EAO irrespective of whether he does so exclusively or not. 
  2. To impose the existing statutory duties concerning the provision of information to purchasers and the regulation of advertisements under sections 36 and 44 of the EAO on estate agents and salespersons who engage in the sale of first-hand residential POH.
  3. By binding Estate Agents Authority's guidelines, prescribe the specific information to be provided to the purchasers, and regulate the content of the advertisements for first-hand residential POH.


On top of the existing requirement, the Council proposed to enhance information disclosure in the 4 key documents provided to consumers.  Examples are (i) the due diligence report should include the issuer’s name, the authority and professional qualifications; (ii) the legal opinion must state if any deposit protection mechanism is in place in the place where the POH is situated; (iii) warning statements must include the risks of exchange rate fluctuations; rental return/guarantee may not be honoured, there could be delay in completion etc.; and (iv) sales and marketing materials must include prescribed information.


As for advertisement regulation, apart from clear and legible display of information, there must be no exaggeration or misleading representations.  There should be regulations on font size of print advertisements and the period of exposure for digital advertisements in presenting key information like warning statements.


  1. Introduction of a no-less-than-7-days cooling-off period for reservation fees, which upon withdrawal from the purchase, an administration charge which is reasonable and not excessive should be allowed to be deducted therefrom.
  2. Should recommendations 1-4 be implemented and further consumer protection is required, by way of an incremental approach, there should be mandatory requirement that all sales of first-hand residential POH be conducted through licensed estate agents/salespersons.

The Council would like to emphasise that it is not the intent of the Council to put forward recommendations that will make the purchase of POH risk-free, but to safeguard consumers in such a significant purchase through accurate presentation of information and the provision of professional services from estate agents.  The Council hopes that the release of the study can stimulate constructive discussions by stakeholders and the public, and foster a win-win POH market for both consumers and traders.