Bills Committee on Estate Agents Bill
Gist of views of the estate agents trade expressed at
the informal meeting held on 18 November 1996
The following is a gist of views of representatives from 12 organizations who attended the informal meeting on 18 November 1996.
On the Bill in general
1. The Report of the Working Group on Regulation of Estate Agents contains very general recommendations whereas the provisions in the Bill are very refined. The Bill has apparently deviated from the intention of the Working Group and is aiming at a perfect system which will be impossible to achieve in the short term. The Administration does not appear to have regard to the actual practices of the trade when drafting the Bill. There is a need for the Administration to re-consider the depth and the effect of the Bill and to review its provisions.
2. The Bill when enacted will bring a major change to the operation of the trade and it is estimated that 90% of estate agents will not be able to adapt and comply with the requirements. The Bill seeks to raise the estate agents trade to a professional level such as that of solicitors, and it would be difficult to reconcile the basic educational requirement for entry to the trade with the complex duties which estate agents are expected to discharge. Estate agents will find this most frustrating.
3. There is concern on the compatibility of regulations to be drawn up by the Estate Agents Authority with the intention of the Bill.
4. The requirement under Clause 47 for an owner to give his written consent before an estate agent can advertise the premises concerned inhibits flexibility.
On Clause 37 - Information as regards properties, etc.
5. The LegCo research report gives a true picture of the actual situation. One participant quotes examples of having to wait for over one month for building/floor plans and for one week for an Occupation Permit; others say that some property information is not available at all. In order to tie in with the requirements of the Bill and to facilitate the work of estate agents, a compromise will be for the Administration to recognise its responsibility for providing reliable and readily available property data through setting up the Central Data Bank.
6. Property information in overseas countries such as Canada and the States is very advanced, and estate agents can have direct access to such computerized information as users restrictions and lot sizes. By comparison, the estate agents trade in Hong Kong is far more active and internationalized and yet the provision of property data by the Administration is very backwards. This further affirms the need for a Central Data Bank.
7. Some property information, such as that on ownership, is more important than others and hence the Bill should allow for the provision of the six items of property information to be implemented by phases. One participant suggests that such information should be made available only immediately before transactions rather than at the beginning of agreements; another suggests that owners should be responsible for providing such information, or that visits to the premises concerned by the potential purchasers should suffice.
8. The Buildings Department has a Working Group focusing on building plans but the significant increase in the number of transactions may have prolonged the time needed for providing such plans to their clients. Furthermore, certain information in the plans and the Occupation Permits, such as that on floor area, do not tally and this will create difficulties for estate agents.
9. Second owners of premises may not be aware of structural alterations and it will be unfair to request vendors to make statements on structural additions or alterations of buildings or other structures as required under Clause 37(2)(g). This requirement also hinges on whether the Buildings Department can provide accurate information.
10. Collation of the six items of information takes time and is costly, and will affect the operation of the trade. If an owner asks multiple agents to sell his property, the time, efforts and costs involved will be enormous. This will create significant workload for the trade and for Government departments concerned. Taking into account the fact that about 10 million transactions take place each year in Hong Kong of which 70% are conducted through estate agents, estate agents will have to spend several millions of dollars in obtaining the property information. There is also the worry that the cost will be passed on to consumers and this will not be in their interests.
11. There is a need to clarify and define the types of property information required. For example, when reference is made to "floor area", the Bill should state categorically whether the gross area, net area, saleable area, or usable area of a premises is being referred to. One participant has pointed out that the trade and owners are used to making reference to the gross area of premises and any change now will create confusion. Solutions proposed are for:
- the gross floor area of premises to be specified in plans or to be provided by the Rating and Valuation Department;
- the age of buildings and the floor areas to be stated in demands for rates; and
- additional and relevant information such as title deeds to be added on to the Names of Buildings.
12. As the sales brochures on description of flats issued by developers also plays an important role, the Government should provide a library on such brochures.
13. Some are in support of the due diligence concept as this will go some way in alleviating the difficulties in collating the requisite information and will not hold up transactions unnecessarily in view of the rapid changes in market value of properties. Others however have reservations as they consider it unfair for the onus of proof to be placed on the accused before accurate property information can be made available. One remarks that the Bill should advocate the due diligence principle, with the details being left to the Estate Agents Authority.
14. For clarity purpose and in order to expedite the process involved, some have suggested devising a standard form entitled "Disclosure Statements" so that an estate agent could tick either of the boxes of "known" and "unknown" against each of the six items of property information.
15. Apart from the three departments of Land Registry, Rating and Valuation Department and Buildings Department, the Lands Department is also responsible for providing certain information on say small houses in the New Territories.
16. Although the Bill requires one to make reference to Occupation Permits, such Permits do not contain information on subsequent alterations made; a loophole therefore exists. Furthermore, many title deeds are old and illegible, and a solution would be for the Administration to issue Certified True Copies of the deeds. A participant further points out that some properties in the New Territories do not have title deeds, and premises constructed before 1976 do not even have "Certificates of Exemption".
Legislative Council Secretariat
25 November 1996
Last Updated on 17 Apr, 1997