Consent to Sell vs. Occupation Permit vs. Certificate of Compliance

Most new developments are put on sale as pre-construction properties, which can take as little as a few months or as long as three years. Therefore, many hopeful homeowners anticipate the day they can acquire their new home. When a developer obtains an occupation permit for a new residential project, does it mean that it can finally be occupied? What is Consent to Sell and Certification of Compliance, and why is everyone talking about them?  

Consent to Sell is a ‘consent form’ for the pre-sale of uncompleted flats. To enhance consumer protection, the developer has to provide proof that it has the necessary skills and capital to complete the development, and that it has complied with other requirements. If successful, they obtain authorisation and approval from the Lands Department. 

With the Consent to Sell, developers can pre-sell unfinished flats. It is worth noting that the Consent to Sell can be cancelled after approval. Therefore, before purchasing an uncompleted property, buyers should pay attention to whether the project has obtained a Consent to Sell. If it has not been approved, they should not sign any sales and purchase agreement. 

However, it is rare for the sConsent to Sell of a pre-sale project to be cancelled. This occurred in Grand Homm, Ho Man Tin last year, for the first time since 1997. That is to say, the project can no longer pre-sell unfinished units for the time being. Until the project is completed, the developer can adjust its pricing strategy to sell existing flats. 

It’s worth noting that, whether it is an existing building or an uncompleted development, the developer must typically obtain the Occupation Certificate and Certificate of Compliance before initiating the repossession process and notifying the owner to repossess the building for occupation. It is easy to confuse the Occupation Certificate and Certificate of Compliance, but in fact they are completely different. What is the difference? 

Generally speaking, the developer will first obtain the Occupation Certificate and then the Certificate of Compliance. The approval time for the two is about three months to half a year, so if any issues arise during the approval process, the handover date is likely to be impacted. If you are lucky, the building may be handed over earlier than expected.  

An Occupation Permit is a document issued by the Buildings Department (BD). Upon completion of a new first-hand uncompleted residential property, the BD will inspect the project to see if it is constructed in accordance with the Buildings Ordinance, by analysing the project’s number of units, structural integrity, and fire safety compliance. If the new project is structurally satisfactory, an occupation permit will be issued to the new development. 

Conversely, the Certificate of Compliance is issued by the Lands Department. When the Government sells land, it will impose conditions in the land grant agreement, including requirements for the construction of greening facilities, footbridges, pedestrian walkways, and so on. If the developer has fulfilled the conditions, the Lands Department will issue a Certificate of Compliance. 

Once the developer obtains the Certificate of Compliance, they must notify buyers of the formal handover of the flat within one month. Indeed, there are special circumstances. Previously, there were cases where new projects only successfully obtained an Occupation Permit but not a Certificate of Compliance. The most common situation was that new developments consisted of multiple sites and public facilities could only be finished upon the completion of other phases. In such a case, the developer can successfully apply for a “Standard Form of Transfer” from the government and continue to conduct sales. 

Another exception includes small flats. Since developers are not required to submit building plans for small flats to the Buildings Department, they are also not required to apply for an Occupation Permit after completion of the flat. They only need to send District Office personnel to inspect the building and issue a Certificate of Compliance. From there, buyers can move in. Additionally, projects involving the reconstruction of old buildings do not need to provide a Certificate of Compliance due to its old land lease. Here, the developer only needs to apply for an Occupation Permit from the Buildings Department, although the application for a mortgage will be more complicated.

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