Prison proposal draws caution
The Real Estate Developers Association is warning the government not to overreact when deciding on a jail penalty in legislation to regulate the primary property market.
Stewart Leung Chi-kin, chairman of the Reda executive committee, said yesterday that the government should clarify the circumstances that would incur a jail term.
'In principle, we don't object to legislation,' Leung said. 'The most important thing is not to overreact. Regulation and penalty are necessary. But if it goes so far as to make us unable to do business and sell flats, it will be troublesome.'
He spoke a day after a government steering committee met for the last time to finalise a list of reforms for the property market. Leung is Reda's representative on the committee, which was formed in October last year. Leung said he represented a 'minority view' on the panel.
The reform in question is a seven-year prison sentence for a director in a development company who gives false information.
Was this an overreaction? Leung did not reply directly, but said there should be distinctions in the degree of seriousness of an offence.
'It is hard to define misleading [information] or misrepresentation,' he said. 'A mistake can also be a typo, or an advertisement so exaggerated that it becomes misleading. But if a staff member selling flats says something [wrong or misleading], is it the boss' responsibility? ... I don't believe this should involve the boss.'
Leung said senior management should be held liable only if the manager was 'stupid enough to instruct' staff members to lie or mislead.
The proposed legislation also calls for the set-up of unmodified show flats, immediate disclosure of transaction information, and the release of a price list and a sales brochure three and seven days, respectively, before the launch of a sale.
The most serious penalty, seven years in prison, could apply to anyone at a developer's firm - whether a director, a senior manager or a salesperson - found to have given false or misleading information, verbally or in writing, to boost sales or prices.
The reference is taken from the Securities and Futures Ordinance, which imposes up to seven years' imprisonment and a HK$1 million fine for giving false information when selling investment products.
Another committee member, lawmaker Lee Wing-tat, said the panel also suggested the forfeiture of the deposit be reduced to 5 per cent from 10 per cent of the flat price, if a buyer chose to cancel the deal within three days of the purchase.
The committee also decided that if a person or company sold only a single flat, say, a village house, they could be exempted from the proposed law.
A spokesman for the Transport and Housing Bureau said: 'Members' views have been fully expressed and debated in the various meetings. A report will cover all the issues dealt with and will give a faithful account of the main points considered.'
Government lawyers will draft a bill based on the report, which will be released for public consultation and then for lawmakers' scrutiny.