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A woman studies an estate agent's listings. Photo: Bloomberg

Hong Kong estate agents' watchdog cracks down on ballot 'loans' to prospective buyers

Following rise in complaints, watchdog cracks down on practice of offering cashier's orders to prospective buyers of newly built properties

Samuel Chan

The Estate Agents Authority says it has "reined in" the practice of agents offering cashier's orders to prospective buyers so they could enter property sale ballots, following a rise in complaints.

While the authority did not discuss individual cases, it said agents would breach its guidelines by offering prospective buyers, sometimes at their request, what amounted to a loan so they did not miss ballot deadlines.

When there are more buyers than available flats at a new development, prospective buyers usually have to show that they can pay a deposit before being entered into the draw for a flat. By putting up the order, the agent increases the chances of getting commission on a sale.

Complaints about the practice rose to 11 last year from just two in 2013.

However, authority chairman William Leung Wing-cheung said on Wednesday that such complaints would fall this year.

"We have already issued notices to the industry and have been in touch with the estate agencies involved," said Leung, who took office late last year.

"There will be no more grey areas," he said, referring to the explanations given by some estate agencies that they were not aware that such practices were in breach of authority guidelines.

Of the 11 complaints, two cases were referred to the authority's disciplinary board for further scrutiny, while eight cases remain under investigation. Another case was dropped.

The authority detected a further case as part of its regular inspections of sales exhibitions for new homes. In this case, an agent was fined HK$60,000 and ordered to take lessons on the authority's regulations.

Asked if this was a deterrent given that the maximum fine is HK$300,000, Leung said the regulations were sufficient and the authority could revoke an agent's licence for life if necessary.

Overall, the authority received 399 complaints last year, down from 494 in 2013. But a 27 per cent year-on-year rise was seen in complaints about the sale of new flats from 44 in 2013 to 56.

Other complaints about new properties involved failure to honour a promised rebate, providing misleading information on mortgages and mishandling or failing to explain provisional sales or tenancy agreements.

On another issue, the authority is studying the feasibility of making estate agents declare when they are considering buying a property, according to chief executive Ruby Hon Yuen-ping .

But she denied that this was a widespread practice to inflate demand. The authority hoped to launch a declaration mechanism in the first half of this year.

Meanwhile, the number of estate agents has fallen for a fourth year. There was a 19 per cent year-on-year drop to about 35,000.

This article appeared in the South China Morning Post print edition as: ESTATE AGENTS' BODY GETS TOUGH ON BALLOT 'LOANS'
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