Developers turn against law to regulate flat sales

PUBLISHED : Wednesday, 01 February, 2012, 12:00am
UPDATED : Wednesday, 01 February, 2012, 12:00am


Hong Kong's big developers are toughening their position against a government plan to regulate the sale of new flats. The Real Estate Developers Association (REDA) now says some of the government's key proposals are unconstitutional, warning that the proposed law would not survive a legal challenge.

REDA also made counter-proposals, some of which amounted to keeping the status quo.

The Law Society's Ambrose Lam San-keung, who helped with the legislation, defended it as being in the public interest, while Democrats legislator Lee Wing-tat said REDA's new approach was irrational.

The law, to come into effect in 2013, is intended to better protect buyers of new homes against dishonest developers, and increase transparency. It sets out penalties including a maximum punishment of seven years' jail and a HK$5 million fine for developers who provide false or misleading information to buyers.

Earlier, REDA said it supported the legislation and was only concerned with practical details.

In REDA's latest submission to the Legislative Council it said the government provided no cogent reason that would enable the legislation 'to survive a constitutional challenge' apart from the objective to protect buyers.

REDA's submission said that a proposed requirement to release a price list covering a minimum number of flats of a project three days before a sale began 'clearly amounts to an unlawful infringement of the owner's rights' to use or dispose of the flats. And REDA said the price list should not include homes of 'special characteristics', which it defines as those larger than 1,722 sq ft.

It said a ban on using 'gross floor area' (GFA) as the basis for describing flat size and for listing prices would be an infringement of freedom of expression. Officials have said GFA is confusing to buyers because developers have different definitions. The officials prefer 'saleable area', meaning the internal flat area plus balconies but minus bay windows.

REDA now wants a standardised definition of GFA, which it defines as 'areas that serve exclusively the residential part'.

The Transport and Housing Bureau said a two-month public consultation, which ended on Saturday, drew 950 submissions.

'We will ... make every effort to submit the bill to the Legislative Council in the first quarter of 2012,' a bureau spokesman said.

Ambrose Lam San-keung, representative of the Law Society in a government steering committee that made recommendations for the legislation, said he believed the proposal had already struck a balance between protecting developers' property rights and the public interest.

'Rights are not absolute,' Lam said. 'The law serves the general public interest and not just the interest of a small group of people.'

Lee Wing-tat, a committee member and chairman of Legco's housing panel, said he did not understand why REDA's representative in the committee did not express such concerns about constitutionality in the drafting stage, and that the association seemed to advocate a reverse of everything. 'What they are now talking about is far from rational,' he said. 'If they say the price list arrangements are unconstitutional, why did they adopt this in their existing administrative guidelines?'


Fall in the number of flats under construction at the end of 2011, compared with a year earlier