HK$300m deal on offer to buy back shabby Icon flats

PUBLISHED : Thursday, 20 January, 2011, 12:00am
UPDATED : Thursday, 20 January, 2011, 12:00am

The developer that delivered 'rubbish dump flats' at a Mid-Levels project is offering to buy back the 26 problem apartments in a deal totalling HK$300 million.

Winfoong International announ- ced the move last night after proposing two other compensation options of cash and renovation a day earlier.

Super Homes Limited, held by Winfoong, authorised Centaline Property Agency to buy back Flat A and D units of The Icon at a price 10 per cent higher than the original purchase prices.

The 26 flats in Conduit Road sold for between HK$8.7 million and HK$12.88 million in 2009 and the buy-back deal would amount to HK$300 million.

A businessman involved in the project said the developer would take back the flats and renovate them again. The company had not decided when to resell them. Winfoong and Centaline could not be contacted for comment last night.

Lawmaker Tanya Chan said six buyers she represents were deciding what to do.

She said: 'The property market has gone up a lot over the past two years. Three buyers told me they would consider the buy-back, but they have to see whether they will gain or lose after deducting the interest, stamp duty, lawyer fees and other costs.'

The flat buyers were notified by Centaline agents only by phone and have not received a written offer.

It was also uncertain whether two earlier offers were still valid, Chan said. On Tuesday night, buyers were given the options of accepting HK$500,000 and living with the existing, tiny, enclosed kitchen or taking HK$180,000 and having an unapproved open kitchen, as advertised in a promotional leaflet, installed in six months' time.

But Chan said: 'Even now that there is a buy-back deal, the government agencies should not stop investigations, since the Icon saga has brought out problematic sale practices of the developer and agencies.'

The founder and shareholder of Centaline, Shih Wing-ching, admitted his colleagues made mistakes in The Icon controversy.

'There is no doubt that we have done wrong this time,' said Shih, who stepped down from the company management last year.

'The company is now investigating the case. An internal taskforce has been set up to look into the matter and see how we can improve the system.'

Shih said several employees, ranging from sales agents to district managers, could be held responsible.

The controversy surrounding The Icon started last week when an apartment buyer said she found her HK$10 million flat had been left in 'rubbish dump' condition one month after she completed the purchase.

It emerged that the developer tried to avoid fire safety rules over open kitchens, for which a special application is required.

The developer submitted a building plan containing an enclosed kitchen to the Buildings Department for approval, but proposed to buyers that after handing over the flats, it would get contractors to remove the wall and set up an open kitchen elsewhere in the apartment. Buyers signed the agreement.

The 16-storey apartment block is on a site with an unrestricted land lease and escapes regulation by a Lands Department scheme that monitors flat sales.

The Buildings Department has started checking for unauthorised alteration works in the flats, and the Estate Agents Authority is investigating three complaints against Centaline.

A spokesman for the Housing and Transport Bureau said the Icon case had drawn government concern over sales practices.

A committee working out a draft law to regulate flat sales would continue to look at the problems that had arisen. A property agent who did not want to be named said the buy-back offer was rare.

'Usually a developer will rectify any faults for the buyer. Considering the 24 per cent rise in the luxury home market in 2010, the developer's offer is rather cheap,' he said.

Democratic Party lawmaker James To Kun-sun, said the buy-back offer would be the most convenient solution for both the developer and the buyers. He said: 'If buyers return the flats, there will be no more victims. Government investigations may have to stop.'

Payback time

Winfoong International has made three offers to the buyers of 26 flats

The developer is now offering to buy back the problem apartments with this amount added to the purchase price: 10%