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Curbs on developer tricks 'too weak and voluntary'

HONG KONG: Government proposals to curb speculation and cool the property market were criticised on April 22 as inadequate to curb developers' marketing ploys. Critics called for a legally binding policy to regulate flat sales instead of the voluntary guidelines proposed.

Financial Secretary John Tsang Chun-wah announced measures on Wednesday, April 21, that call on developers to disclose transactions involving board members within five days, to release a price list three days before sales, and to sell more flats in the first batch of sales in a development to limit the potential for price manipulation.

But the government is still discussing the proposals with the Real Estate Developers' Association.

Democratic Party lawmaker Lee Wing-tat said the requirement to sell more flats in the first batch could be misleading.

According to the guideline, in a small-scale development the first batch should be 30 flats or 30 per cent of the total number available for sale, whichever is higher, and 50 flats or 50 per cent for a big development.

But the government did not define "the total number of units available for sale".

"It may not refer to all units built on the site. It may just refer to the total number of units that developers have selected for sales, which will have far less implication," Lee said.

A small developer who did not want to be named said a developer might sell its projects in more phases to avoid putting a large quantity of flats on the first price list.

Lawrence Poon Wing-cheung, a spokesman for the Institute of Surveyors, said the scope of disclosure should be widened to cover all staff of the property companies. "Only disclosing transactions involving board members is too lenient. What about the sales manager and other staff in the sales department? Their transactions can make up most of the transactions if the developer really wants to manipulate the market," he said.

Poon said the five-day disclosure rule should also be shortened: "It's easy for developers to disclose the information on the day of transactions given advanced information technology. Otherwise many buyers are cheated by the time of disclosure."

Lee Wing-tat said developers should disclose the information one day after the transactions.

Centaline's Wong Leung-sing said developers might include less attractive flats in the first batch at a lower price to attract buyers. "They might look cheap, but they might be units on low floors and close to refuse rooms. The price will go up in the second batch," he said.

Consumer Council chief executive Connie Lau Yin-hing said the council and Estate Agents Authority would monitor developers and the government should consider legislating against unscrupulous tactics if the situation did not improve.

Secretary for Transport and Housing Eva Cheng said on Wednesday, April 21, that the government would not rule out legislation if the guidelines proved ineffective. "But we can't underestimate the complexity of legislation because it would involve many issues," she said.

A spokesman for her bureau said on Thursday night (April 22) the guidelines would be applied to all new flats, including redevelopments regulated by old land leases.

But the government is still discussing the proposals with the Real Estate Developers' Association.

Democratic Party lawmaker Lee Wing-tat said the requirement to sell more flats in the first batch could be misleading.

According to the guideline, in a small-scale development the first batch should be 30 flats or 30 per cent of the total number available for sale, whichever is higher, and 50 flats or 50 per cent for a big development.

But the government did not define "the total number of units available for sale".

"It may not refer to all units built on the site. It may just refer to the total number of units that developers have selected for sales, which will have far less implication," Lee said.

A small developer who did not want to be named said a developer might sell its projects in more phases to avoid putting a large quantity of flats on the first price list.

said developers might include less attractive flats in the first batch at a lower price to attract buyers. "They might look cheap, but they might be units on low floors and close to refuse rooms. The price will go up in the second batch," he said.

Consumer Council chief executive Connie Lau Yin-hing said the council and Estate Agents Authority would monitor developers and the government should consid

Lawrence Poon Wing-cheung, a spokesman for the Institute of Surveyors, said the scope of disclosure should be widened to cover all staff of the property companies. "Only disclosing transactions involving board members is too lenient. What about the sales manager and other staff in the sales department? Their transactions can make up most of the transactions if the developer really wants to manipulate the market," he said.

Poon said the five-day disclosure rule should also be shortened: "It's easy for developers to disclose the information on the day of transactions given advanced information technology. Otherwise many buyers are cheated by the time of disclosure."

Lee Wing-tat said developers should disclose the information one day after the transactions.

Centaline's Wong Leung-sing er legislating against unscrupulous tactics if the situation did not improve.

Secretary for Transport and Housing Eva Cheng said on Wednesday that the government would not rule out legislation if the guidelines proved ineffective. "But we can't underestimate the complexity of legislation because it would involve many issues," she said.

A spokesman for her bureau said on April 22 night the guidelines would be applied to all new flats, including redevelopments regulated by old land leases. -- South China Morning Post

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