Rules on flat sales are important
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Hong Kong people invest in the property and stock markets for future security and prosperity. Sentiment in one market is reflected in the other. They have a legitimate expectation that transparency and ethical codes of conduct apply to both markets. This is far from the case in practice. Heavy penalties for using misleading or false information to manipulate share sales or prices do not apply to the marketing of flats. This inconsistency would be tackled under measures proposed by a government steering committee on the regulation of sales of new flats; the panel was set up in the wake of a widely publicised marketing scandal and amid public disquiet over unfair sales practices.
Under the committee's proposals, a developer's directors, management and staff who provide false or misleading information to potential flat buyers would be guilty of a criminal offence punishable by a jail term - as are similar offences in the sale of investment products under the Securities and Futures Ordinance. At present they face only the possibility of civil claims by victims of alleged breaches.
The Real Estate Developers' Association has cautioned against over-reaction. A spokesman said it could be hard to define misleading information and misrepresentation and questioned whether a manager should be held responsible for rule breaches by a member of staff without proof the latter was acting on instructions. These issues need careful consideration - without losing sight of the public interest - when the government drafts a bill for public consultation. There can be little argument with other proposals, such as that show flats be true representations, and that brochures and information about prices and sales be released sooner than they are now.
That said, it is good that the REDA has acknowledged the need for regulation and transparency and has not ruled out custodial penalties for serious misconduct. It is the principle that is important. A healthy market must be transparent, with a level playing field for all.