Size matters in new code on flat sales
Advertisements for second-hand homes will have to show exactly how much space there is in each flat from next year, though estate agents will not be banned from using a controversial measure that can hugely inflate the quoted size of flats.
The Estate Agents Authority yesterday ordered the city's property agents to use the 'saleable area' of a property, which includes balconies but excludes common areas and bay windows, in all promotional material from January 1.
The authority had been expected to set out a timetable to abolish the use of 'gross floor area', which boosts the quoted size of a flat by including its share of communal areas such as lobbies and staircases and has been condemned as highly misleading. But its circular, issued yesterday, said the measure could still be used alongside the saleable area.
The consumer watchdog warned in 2009 that as much as 32 per cent of the quoted size of a flat in some new estates could be made up of communal areas or space that could not be used, such as bay windows.
'It is a colossal task to transform the industry's habits,' William Leung Wing-cheung, chairman of the authority's practice and examination committee, said yesterday. 'We will take a progressive approach to educate and publicise the use of saleable area.' Agents who fail to comply with the new rule will face a penalty ranging from a reprimand to a fine or the revocation of their licence.
But agencies will still be able to quote the gross floor area as long as it is written in text no bigger than that used to show the saleable area.
The Legislative Council is expected to approve a ban on the use of gross floor area in the sale of new flats before the end of the legislative session in July. Developers fiercely oppose the ban, arguing that there will be confusion because of the continuing use of gross floor area in the second-hand market.
Leung says he hopes saleable area will eventually become standard, but would not be drawn on how long the transition would take. 'It depends on how quickly the public adopts the use of the saleable area,' he said.
The Consumer Council, which has long advocated a ban on the use of gross floor area, said it 'hoped ultimately only the saleable area will be used' in the secondary market.
Lawrence Poon Wing-cheung, of the Institute of Surveyors, said the authority should set out a timetable for a ban on the use of gross floor area. While the use of the measure for second-hand flats was less damaging than in sales of flats that have not been constructed yet, it could make it difficult for buyers to compare flats in different developments, he said.
Agents already have to state the saleable area in standard forms when properties are rented or sold, but buyers would normally see such forms only when they had committed to a property.
Leading property agencies, including Centaline, Midland Realty, and Ricacorp, have no objections to the new rule, but say they do not want a ban on quoting gross floor area.
The Rating and Valuation Department holds a record of saleable areas, which can be ordered for a HK$9 fee. The information is also included in the sales agreement from the first time a property is sold, available from the Land Registry.
The Rating and Valuation Department said it would not be appropriate to print saleable area information on the notice of payment sent to ratepayers each year because it would need to change its computer programme. But since 2011 the department has sent saleable area information to buyers of new flats.