Residential Properties (First-hand Sales) Bill

On April 20 2012, REDA submitted a counsel opinion to the Bills Committee of the Legislative Council regarding the Residential Properties (First-hand Sales) Bill in an effort to point out certain sections of the Bill that may be flawed and which should be addressed before proceeding with the legislation as it is currently drafted.

REDA’s position is not to block or delay passage of the Bill, which the Association has always fully supported, but to ensure that, when passed, the law has been thoroughly thought out, is fair to all parties involved, and meets the expectations of the Hong Kong community.

The leading counsel who prepared the legal opinion is Lord Pannick Q.C. He is one of the most experienced and reputable counsel in the UK and European Court of Human Rights specialised in human rights law, and has represented the HKSAR Government for some leading human rights and constitutional cases.

Although the Administration continues to claim that it believes the draft law is constitutional and does not infringe the Basic Law, it has not produced any legal opinion to support its stand despite numerous requests from REDA.

The Administration also says that it has the full backing of public opinion in drafting the law. While REDA acknowledges that the public wants to see fair and transparent legislation in place, it does not believe Hong Kong people would be satisfied with a piece of flawed legislation that has been rushed through without due consideration of the views of all stakeholders.

First-hand property sales, both completed and uncompleted, only account for about 15% of transactions in the Hong Kong property market. REDA has always maintained that there is no fundamental difference between a completed first-hand property and a second-hand property as both can be physically inspected. Applying two sets of rules to virtually the same product will only serve to create more confusion in the market and is clearly discriminatory in nature.

Furthermore, exempting the Housing Authority from the new legislation is without merit and contradicts the Administration’s stated purpose of increasing transparency in the sale of first-hand property. This exemption only means that purchasers of HOS flats will be discriminated against as they will not be afforded the same protection as purchasers of flats from the private sector.

The public has made its position clear that it wants more transparency in the property market including access to as much accurate information as is available. REDA fully appreciates and supports that expectation, but legally barring developers from providing certain information, such as GFA, contradicts the stated aims of the Administration.

The EAA put out a press release recently which permits the use of GFA when selling second hand properties to provide buyers more information and claiming the market would naturally move to saleable area over time. This view was later repeated by some politicians. If this is truly their thinking, then why only prohibit GFA from first-hand properties and not others? Why not let the market decide as they have said it would do over time. This also contradicts the claim that no definition for GFA can be agreed.

The opinion provided by REDA’s counsel highlighted the lack of wisdom in the Government’s insistence that vendors of first-hand properties must provide a price list for flats even if they have no intention of selling them. Not only is this discriminatory as sellers of second-hand properties do not have to follow these same rules, it will also create more confusion to the marketplace as consumers are given information of properties that are not actually for sale!

While the Government has said that developers do not have to sell the properties they list, as this would be a clear breach of the Basic Law, it brings into question whether putting out such price lists would be considered as having provided misinformation to the public, which is a criminal offence under the new legislation punishable by up to 7 years in jail.

REDA continues to offer its support and assistance to the Government in the drawing up of effective legislation for the sale of property that is fair to everyone and provides a level playing field for all parties concerned.