Best practice
Anyone looking to buy a home in Hong Kong is now in a better position thanks to new industry guidelines. Andre Cooray reports
Public outcries for greater transparency in the property market have pushed the Transport and Housing Bureau (THB), the Lands Department (Lands D), the Real Estate Developers Association (REDA), the Consumer Council (CC) and the Estate Agents Authority (EEA) in Hong Kong to put their heads together. The result is a range of best practice guidelines that aims to help prospective homebuyers make an informed choice, as well as safeguard them from entering bad deals.
Reacting to complaints from buyers, REDA now requires members to publish detailed sales brochures and price lists before launching new developments. Price lists should cover at least 20 flats or 20 percent of the total number of flats on offer in the first batch (whichever is higher), and need to be made available at least one week prior to the sale of all new builds. The guidelines are applicable to REDA members only and are not bound by law.
“Developers who are members of REDA can’t take a cheque from interested parties till the price is published. For big projects with hundreds of units this type of information is good to know. But it’s a challenge for smaller developers especially in an unstable market. In Hong Kong, the transparency of the market is perfect as buyers can check property information via the local media, second-hand market and internet,” says Cherri Lai, the head of residential property in Hong Kong for HongKong Land.
Lai notes that, by putting out a price list for 20 apartments at the March launch of The Sail at Victoria, in Kennedy Town, Hongkong Land met new industry best-practice guidelines. “The Housing Bureau suggested not to sell until we have a price list, so we disclosed 20 units for registered clients,” she says. “We are now free of any boundaries to collect interest from the market.”
Charles Chan, managing director, Valuation and Professional Services for Savills in Hong Kong, agrees that the publishing of price lists helps to increase market transparency but points out that it provides only an indication of the price – the actual amount a property is sold for will depend on the reaction it gets from buyers. “A developer may publish a price but if the response is poor it will change. Also, in Hong Kong one can go to the land registry and look at the agreement in terms of selling prices – there are no secrets,” he adds.
In late 2008, the Lands D amended guidelines relating to up-and-coming properties by standardising the definition of ‘saleable area’ to mean the area occupied by the unit, the balcony and the utility platform. Common areas such as lift lobbies are no
longer considered part of the saleable area and should be listed as separate items. REDA has also standardised its definition of saleable area, in addition to revising its recommended price list and sales brochure templates for new builds.
According to REDA, the latest versions of sales brochures should be made available on the first date of public sale, with the date of printing clearly stated. They must include details such as floor plans, prominent fittings and finishes, and the layout of buildings within the development boundaries. Location plans are even required to identify all free-standing and purpose-built facilities within 0.25 km of the premises, such as hospitals, fire stations, police stations, ambulance depots and markets, as well as funeral parlours and cemeteries.
“Standardising the definition of saleable area and the presentation of the price list serves to further enhance the transparency and clarity of information presented in the sales descriptions for uncompleted first-hand residential properties,” the THB states.
Meanwhile, the EEA provides a licensing and regulatory regime that ensures real-estate agency practitioners provide comprehensive information to flat buyers; and the CC continues to educate the public on important information regarding property purchasing. As long as organisations like these opt to create, monitor and upgrade guidelines relating to the sale of property in Hong Kong, buyers can rest assured that their best interests are close to someone’s heart.
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