Call for regulator to bare its teeth
Real estate players say the EAA should do more to ensure that integrity improves and there is less false market information
The property sector regulator must increase its scrutiny of real estate agents in the face of mounting public concern about misconduct by practitioners.
Industry players said the Estate Agents Authority (EAA), the statutory body which regulates agents, should toughen its sanctions and that it was also not using its 'teeth' to the extent it could.
The regulatory body should also step up enforcement of the disclosure regime to protect consumers from any false market information, they said.
'The EAA has all the power it needs to regulate the industry. But its relatively mild sanctions on rule breakers may not be deterrent enough for further wrongdoing in the industry,' said Karen Wong, president of the Society of Hong Kong Real Estate Agents, the biggest industry body which represents 6,000 industry practitioners.
The integrity of agents came under the public spotlight again after the EAA last month said it would suspend a Centaline Property Agency agent for two months and fined the firm $200,000 for false market transactions.
This was followed by a fine of $100,000 for Centaline's Sha Tin branch due to poor administration and misleading advertising.
The misconduct of agents has been brought to the attention of the Housing Department and Consumer Council, which aim to ensure consumers are treated fairly.
Tam Wing-pong, deputy director (strategy) at the Housing Department, said the department was concerned about the issue.
'The government is monitoring [the professional standard of] estate agents,' said Mr Tam, adding that the government did not rule out the possibility of reviewing regulations on misconduct.
A Consumer Council spokesman expressed concern over estate agents making false claims, saying the council would work closely with the EAA.
The property market has rebounded sharply since the second half of 2003. Last year, the value of property transactions rose 86 per cent to $351.79 billion.
The property market revival has seen a surge in the number of people joining the estate agent industry. There were 20,517 agents at the end of July, up from 18,675 at the end of last year.
The EAA said nine licences were suspended this year. It received 335 complaints in the first half, while 588 were received last year.
Hong Kong Chamber of Professional Property Consultants president Lawrance Wong Dun-king criticised the existing Estate Agent Ordinance, drafted in 1995 and enacted in 1997, saying it was outdated and could not keep track of the present market environment. He said the EAA should tighten its disclosure regime.
But others believed the poor quality of agents was due partly to low entry requirements because a Form Five graduate who passed the 50-question multiple choice examination could become an agent.
Centaline Property Agency chairman Shih Wing-ching said: 'For instance, how can you expect a secondary school graduate to understand and handle complex legal documents such as a Deed of Mutual Covenant for clients?'
Mr Shih said another fundamental issue in the industry was that it would be difficult for clients to ensure agents performed their fiduciary duties. 'Every property agent is a double agent in Hong Kong, representing a buyer as well as a seller. So it may be difficult to know whose party's best interest an agent is acting for,' he said.
But Cheung Tin-sung, chairman of the Hong Kong Real Estate Agencies General Association, which represents 800 estate agencies, attributed the rising malpractice cases to stiff competition in the industry in the booming market.
EAA chief executive Sandy Chan Pui-shan dismissed criticism that the EAA had not fully exercised its disciplinary power, saying that the law prescribed specifically the scope and range of penalties that could be imposed for breaches.
'We will play the role of a vigorous gatekeeper. To enhance consumer protection, the EAA has strengthened its regulatory work relating to estate agency practice in primary property sales ... We are working towards higher standards of professionalism for the overall good of the industry and the community,' Ms Chan said.
Ms Chan said the EAA had conducted more than 900 inspections of sites and shops in the past seven months.