Flaws found in planned rules on floor space

PUBLISHED : Wednesday, 21 December, 2011, 12:00am
UPDATED : Wednesday, 21 December, 2011, 12:00am

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Major property developers have branded the government's plans for laws regulating the sale of new flats as 'unfair'.

Stewart Leung Chi-kin, chairman of the Real Estate Developers Association's executive committee, said: 'We are not against the legislation. But there are provisions that it is not practical to implement.'

Leung was accompanied at a media briefing on the proposed legislation by executive directors or sales managers of four of the city's largest major developers - Cheung Kong, Henderson Land, Sun Hung Kai Properties and Sino Land.

He was commenting on a draft bill released last month for a two-month public consultation. The bill will be tabled in the Legislative Council after feedback on its provisions have been taken into account.

Describing the proposed legislation as 'unfair', Leung insisted that the law should not rule out the use of gross floor area (GFA) - the saleable floor area plus its share of common areas - to describe the size of a flat.

The law, which covers only the primary but not the secondary market, will allow only the quotation of saleable area clearly defined as the internal flat area, plus the balcony but minus bay windows.

The government wants to rule out GFA because developers use different definitions for their projects. This confuses buyers, particularly where flats are still being built.

'The quoting of GFA has been the long-standing market practice,' said Leung. 'There will be confusion for buyers when they compare a new flat and a second-hand flat.'

The confusion would be worse in a residential project in which some flats had been sold and others flats were still owned by the developer, he said.

The association proposed that the industry should come up with a standard definition of GFA, and that developers would agree to list all GFA-accountable items in future.

Leung pointed to other proposed measures, saying the law should not cover completed flats that could be physically inspected by buyers.

He also said the requirement to release a price list three days before a flat sale would make it impossible for developers to offer 'special discounts' to those buying more than one flat in a bid to close a deal.

The exemption of the Housing Authority, which sells subsidised homes for lower income groups, from the law discriminated against private developers, he said.

Susan Leung So-wan, vice-president of the Institute of Architects, said she doubted whether it was possible to come up with a standard definition of GFA, as developers had failed to do so in the past decade.

It was not a problem to compare the sizes of a new flat and a second-hand flat, because the saleable area of existing flats was recorded in the website of the Rating and Valuation Department, she said.

Lawrence Poon Wing-cheung, a member of the government steering committee that made the recommendations, disagreed with the association that completed flats should be exempted.

'Although completed flats can be physically inspected, transparency over their sale is still necessary. So are the rules that require developers to release a price list and disclose transaction records,' Poon said.

The Transport and Housing Bureau said discussions over the proposed legislation over the past year had included the association.

GFA should be ruled out because there was no clear definition, it added.