Agencies attempt to restore ruined image
The nation's embattled real estate agencies face an uphill battle to recover reputations left in tatters after the theft by some unscrupulous agents of millions of dollars from customer deposit accounts and overnight closures that left thousands of employees without pay.
Complaints that property agents have pocketed customer deposits have multiplied in the wake of the headline-grabbing case of Zhong Tian Property Agency president and co-founder Jiang Fei, who disappeared leaving a gaping 170 million yuan hole in the agency's customer accounts, according to some reports.
'The case has definitely hurt the integrity of agents,' said Clement Luk Shing, director and assistant general manager at Centaline (China) Property Consultant's Shanghai office.
On the day Jiang was declared missing in November last year, according to mainland reports, 23 victims went to the local public security bureau claiming losses totalling 26 million yuan.
Weeks later two Shenzhen firms, Chang He Property Agency and Chuanghui Real Estate Consultancy, shut down many of their branches suddenly, which triggered demands by anxious customers for the return of deposits they had left with the branches as security on proposed house purchases.
'Unlike the practice in Hong Kong, having a solicitor represent flat buyers or sellers is not common on the mainland,' Mr Luk said.
'Customers deal directly with property agencies and make deposits with them. So agencies effectively take on the role of lawyers.'
Michael Choi Ngan-min, chairman of property agency Land Power International Holdings, which targets the mainland market, said the cases highlighted the need to regulate the industry. 'In the absence of proper regulations, unethical behaviour such as using customers' funds for speculation in property or stocks cannot be ruled out.'
The nationwide property boom that saw home prices in major cities triple in the past three years prompted a wave of rapid expansion among agencies to tap into the lucrative market. But the measures taken by Beijing to cool the market took a heavy toll on agencies.
In the past four months, six property agencies have either closed or scaled down operations and customer complaints have fuelled a demand for a clean-up of the industry.
In response, the government nominated a select group of banks as the third party to hold customer deposits and the Shanghai, Beijing, Guangzhou and Shenzhen local governments have followed the guideline to protect homebuyers' interests.
'It will take time for the industry to mature. Having banks hold deposits is the right move to restore homebuyers' confidence. Eventually, the responsibility will transfer to mainland lawyers when the public recognises their professional standards,' Mr Choi said.
Hong Kong-based property agencies such as Centaline, Midland China and Hopefluent have welcomed the government's move and say they have adopted internal training programmes to enhance the professional standard of industry practitioners.
Hopefluent said that last year it bought a 12,000 square foot property in Guangzhou to use as a permanent training school.
'The school will be able to accommodate 400 agents each time, and we will provide tailor-made courses for staff with potential to go on to senior management,' said chairman Fu Wai-chung. Hopefluent has 200 branches in Guangzhou.
He said the number of licensed graduates from the school was insufficient to meet demand, and this was on top of government-sponsored courses for property agents.
Under mainland rules, each estate agency branch should be staffed by at least five licensed agents.
But the number of licensed agents fell far short of demand, Mr Fu said, because the national qualification examination was only held once a year.
In Chengdu, homebuyers can check on property agents for reports of misconduct on the internet.
Information on agencies is updated by a government department to protect consumer interest.