Concrete Analysis | Hong Kong watchdog extends purview to regulate licensed property agents selling incomplete overseas property
- Estate Agents Authority circular provides guidelines for licensed agents handling the sale of incomplete properties situated outside Hong Kong
- Consumers are advised to do their homework when purchasing non-local properties
The interest of Hong Kong people in purchasing properties situated outside Hong Kong has been on the rise in recent years. At the same time, there has also been an increase in the number of companies, including licensed property agents, taking part in the sale of such properties.
However, most consumers have limited knowledge of foreign regulatory regimes and taxation systems governing the purchase or leasing of these properties by foreign buyers. In particular, purchasing an incomplete property outside Hong Kong carries greater risk and may lead to a higher chance of complaint, as purchasers not only lack the opportunity to inspect the property and the progress of its construction, they may also have limited knowledge of the background and financial standing of the developers.
The Estate Agents Authority (EAA) therefore issued a practice circular, which took effect last year, on handling the sale of incomplete properties situated outside Hong Kong, to provide guidelines for licensed property agents to follow. Such guidelines only regulate licensed property agents, as non-licensees are outside the purview of the EAA.
Here I would like to share a case in which a licensed estate agency was in breach of the guidelines.
During an inspection of printed advertisements, EAA staff discovered that an advertisement of an incomplete property development in the United Kingdom issued by a licensed company did not comply with the requirements of the practice circular. The advertisement did not state clearly the development permit or approval numbers, the name of the relevant authority which issued such documents, and whether purchasers are acquiring an interest in the land, the building to be erected, and/or a right to use and occupy the properties in the building.
The estate agency admitted its negligence and the fact that it had failed to read the practice circular carefully. It reassured us that they would comply with the relevant guidelines in the future.
