Follow-up on the Miscalculation of Saleable Area at Verbena Heights
Reply to the Questions raised by Hon Frederick Fung Kin Kee

(1)and(2)Some purchasers of Verbena Heights earlier requested the Housing Society to confirm the saleable area (SA) as described in the sale documents. In order to protect their interest, the Housing Society requested the Project Architect to review the relevant information, and re-calculate and verify the SA of each individual flat.

After the review, the Project Architect informed the Housing Society that since the SA figures include the thickness of the external walls, and the structural wall of Verbena Height has different thickness at different floors, the original SA figures have not taken into account this complicate design and the SA of some of the flats have been miscalculated and required adjustment.

In fact, the SA of Verbena Heights is calculated by the Project Architect with reference to the guidelines adopted by the property industry. Such guidelines are jointly promulgated by the Royal Institution of Chartered Surveyors (Hong Kong Branch) and the Consumer Council and have been broadly adopted by the local housing development institutions and developers.

However, in contrast with the common design with the outer face of the structural walls being kept straight throughout all floors, the Verbena Heights has adopted a more complicate design with the outer face of the structural walls in step form. However, the Project Architect has failed to take into consideration such special feature when calculating the SA and hence the miscalculation arises.

After being informed by the Project Architect, the Housing Society has immediately consulted the Consumer Council, and appointed an independent surveyor to confirm the revised SA figures as provided by the Project Architect and, inter alia, send notice to all purchasers explaining the SA adjustment and the relevant arrangements, including not to recover the purchase price underpaid and to pay back the purchase price overpaid, and to compensate for other relevant expenses such as interest, legal fees and stamp duty, etc.

With a view to resolve the housing problems of the affected purchasers, at its special meeting held on 10.11.97, the Housing Society's Executive Committee decided to offer a leasing option for the purchasers. Under this option, purchasers who encounter housing problem following the recession of the purchase will be allowed to lease the rescinded flat at Verbena Heights. The lease term will be 3 years at a fixed monthly rental of about $10 per sq. ft exclusive of rates and management fees. The Housing Society is finalising the details of this leasing option with the relevant Government Departments including the Lands Department and Housing Department.

The SA adjustment will neither affect the internal floor area of the flat nor the quality of the development. The Housing Society has already made its best endeavour to assist the affected purchasers and is deeply regretted for the human fault made by the Project Architect in the course of the SA calculation.

At present, no other Housing Society's projects have adopted the same design as Verbena Heights. In order to protect the purchasers' interest, the Housing Society will in future appoint an independent surveyor to confirm the SA figures in case of design-complicate projects.

(3)and(4)The Housing Society's management can be separated in two levels: policy making and policy execution. The policy making responsibility mainly lies on the Executive Committee and five different Sub-Committees - Development Sub-Committee, Buildings & Tenders Sub-Committee, Estate Management Sub-Committee, Finance Sub-Committee and Administration Sub-Committee. At present, the Executive Committee and the various Sub-Committees have a wide variety of membership, including four ex-officio Government Officials (namely the Secretary for Housing, the Director of Planning, the Director of Lands and the Director of Architectural Services). There are also professionals, executives, grass roots representatives and Housing Society's tenants. While formulating and implementing the Housing Society's policy, these members will, based on their professional knowledge and social-serving experience, offer valuable advice relevant to the development of the Housing Society and to the needs of the target customers served by its various housing schemes.

In order to improve its transparency and accountability, the Housing Society also endeavours to enhance the communication with the community, which includes issuing a regular organisational newsletters, formulation of liaison group with the tenants/owners, maintaining regular contacts with the members of the three-tier system of assembly, accepting to be brought within the jurisdiction of the Ombudsman and arranging exhibitions to introduce to the general public the Housing Society's commitments, etc. All these well demonstrate the Housing Society is an open organisation and is prepared to listen to the views and suggestions through different channels.

Hong Kong Housing Society
14 November 1997

Appendix II

Verbena Heights
Saleable Area (SA) Miscalculation
Compensation Basis

General Condition

CasesCompensation Basis
1Purchasers with SA of their flat not affected

No compensation
2Purchasers with SA of their flat overstated

Purchasers need not to repay the price difference

3Purchasers with SA of their flat understated Overpaid purchase price plus relevant expenses (e.g. interest, stamp duty and legal fees)

Other Conditions

CasesCompensation Basis
Rescind Casesfor purchasers with

Blocks 1 and 2 Purchase price paid plus relevant expenses (e.g. interests, stamp duty, legal fees and management fees)

SA of their flats overstated Blocks 3 to 6 Purchase deposit paid plus relevant expenses (e.g. interests, stamp duty and legal fees)

Appendix III

Housing Society's Latest Arrangement for Purchasers of Verbena Heights

Time LimitBlocks 1 to 2


Blocks 3 to 6
5/11/97 to
-- If owners decide to rescind, they will be compensated for the purchase price, interest, legal fees, stamp duty and decoration cost etc.

-- The Housing Society is in discussion with the Housing Authority for retaining public rental housing flats.

-- If after recission the owners face housing problem, the Housing Society will lease the rescrinded flat to them for a fixed term of 3 years.

-- If purchasers decide to rescind, they will be compensated for the deposit, legal fees, stamp duty etc.

-- As the purchasers have not moved in, the problem of retaining the public rental housing flats will not arise.

-- If after recission the purchasers face housing problem, the Housing Society will lease the rescinded flat to them for a fixed term of 3 years.

17/12/97 to

-- If owners decide to rescind, the Housing Society will buy back the flats at original purchase price. There will be no compensation for interest, legal fees, stamp duty and decoration cost etc.

-- If after recission the owners face housing problem, the Housing Society will lease the rescinded flat to them for a fixed term of 3 years.

-- Not applicable.