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Purchase of Properties Outside Hong Kong — Recommendations and the Way Forward

  • 2021.10.28
Purchase of Properties Outside Hong Kong

Purchase of Properties Outside Hong Kong — Recommendations and the Way Forward

 

Consumers’ demand for properties situated outside Hong Kong (“POH”) has seen a steady climb in the past 30 years. However, purchasing POH often entails high stakes involving millions of dollars, higher risks and uncertain factors. With a view to safeguarding consumer rights, the Consumer Council reviewed the current legislations and regulations from multiple perspectives to identify weaknesses, conducted analyses to see whether unfair trade practices occurred within the industry. The findings were compiled in the “Purchase of Properties Outside Hong Kong – A Study on Enhancing Consumer Protection” report.

 

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.

 

Visit https://www.consumer.org.hk/en/advocacy/study-report/purchase-of-poh to view the full report.