Agents accused of dishonest tactics

PUBLISHED : Wednesday, 09 December, 2009, 12:00am
UPDATED : Wednesday, 09 December, 2009, 12:00am

Disputes between flat owners in buildings targeted for redevelopment and agents appointed to secure their sales agreements are expected to increase as developers become more aggressive in seeking to acquire old buildings for redevelopment.

Rising demand for homes and a limited supply of land in prime locations have prompted developers to turn to the acquisition of old buildings for redevelopment in recent years.

But intensifying competition to secure sales agreements from existing owners has led some agents to engage in questionable tactics, according to critics.

Lam Ho-yeung, a member of the Yau Tsim Mong District Council, said he received seven complaints from flat owners at Hing Wong Mansion in Tai Kok Tsui.

The owners objected to receiving an anonymous letter in October that stated that the ground under their building may be at risk of subsiding, causing damage to the foundations once construction on the proposed Guangzhou-Shenzhen-Hong Kong express rail project begins. The letter writer added that this would affect the redevelopment potential of their block and urged owners to sell as soon as possible before construction on the link begins later this month.

A few days later, the flat owners received a letter from Richfield Realty, a listed property agency that focuses on acquiring old buildings to on-sell to developers, proposing the acquisition of their flats. The letter stated that the agency would negotiate acquisition prices with flat owners individually.

Lam said the flat owners suspected that Richfield Realty was responsible for the anonymous letter which was sent to 'encourage' them to sell their units, and so they complained to the agency. One of the flat owners also complained to Estate Agents Authority (EAA).

Lam said the complaints were also prompted by the agency's unexpected move to lower a non-binding offer of HK$5,000 per square foot made in initial discussions with them to HK$4,000 per square foot in just a few days.

In a November 16 statement, Richfield said it had followed all relevant codes of estate agents prescribed by the EAA in the acquisition of the old buildings.

The firm also denied that it had adopted any improper or illegal means to mislead or induce the flat owners of the old buildings to sell their units at reduced prices.

A spokesman for the EAA said the authority had so far this year received complaints from owners in two buildings about the practices of property agents attempting to secure sales agreements for their acquisition, one of which was related to Richfield Realty and Hing Wong Mansion.

Another complaint of owners to the EAA was that the agent did not fill in one of the key elements in the sales and purchase agreement.

The EAA spokesman said the complaints were still under investigation.

Alnwick Chan, an executive director at property consultancy Knight Frank, said developers were likely to target more old buildings for redevelopment in the future because of the tight supply.

Among the bidders is Henderson Land Development, which has spent about HK$5 billion acquiring majority ownership of nine buildings in Sai Wan, Causeway Bay, Ap Lei Chau, Hung Hom and Tai Kok Tsui. Henderson chairman Lee Shau-kee said in October the company planned to spend HK$20 billion acquiring old buildings this year and next.

New World Development acquired Wai Oi Mansion at Kai Yuen Street in North Point for HK$230 million in September.

Chan of Knight Frank said disputes over the acquisition process were likely to increase as developers and their property agents became more active in the market, and cautioned flat owners to examine the conditions included in purchase offers.

In the case of Hing Wong Mansion in Tai Kok Tsui, flat owners should seek professional comments from legal and engineering experts rather than secure political views from District Council members, he said.

'The government's protection for the flat owners is enough. Flat owners should seek legal advice or professional opinion if they found the agents or developers using inappropriate tactics to acquire their properties or offering an unreasonable price,' he said.

Chan Cheong-kit, a director at Lanbase Surveyors, said authorities should issue leaflets to educate flat owners about issues they should be aware of when agents or developers offer to buy their properties. He said flat owners should also understand whether the documents they sign with the agents were binding or not.

The EAA spokesman said agents found guilty of violating the codes of property agents, including those employing illegal means to secure sales agreements, faced punishment such as the possible revocation of their licences.

Centaline Holdings chairman Shih Wing-ching said flat owners should complain to the EAA if they believed agents used inappropriate tactics to acquire their properties.

'They could also report to the police if they felt that agents or developers used threats to persuade them to sell their properties,' he said.

Aggressive bidders

Developers are likely to target more old buildings for redevelopment

Amount allotted by Henderson Land to buy old buildings until next year, in HK$: $20b