Clampdown on estate managers in the pipeline

Homebuyers will be charged several hundred dollars extra for property transactions by 2015 to fund tighter regulation of building management companies.

A new statutory body will oversee the performance of management companies and practitioners through the issuing of licences and handling of complaints, Permanent Secretary for Home Affairs Raymond Young Lap-moon said yesterday.

The move is in response to concerns that many estate managers are inexperienced and management companies lack transparency.

"These companies are managing a lot of money for the owners' corporations, including management and renovation fees. But owners are often not informed of financial details and are unsure where money has gone during a handover to a new management company," he said.

Estate managers will be required to comply with a code of practice and achieve certain qualifications. Young said the regulations would minimise instances where a single contractor manages to exercise a monopoly over tenders for renovation at an estate by making secret deals - a common phenomenon plaguing many owners.

According to a summary of the bill - which will be tabled in detail in the legislature early next year - a "very small amount" in the form of a fixed levy will be imposed on buyers. It will be less than 0.01 per cent of the value of a transaction. A tentative proposal suggested HK$200 to HK$350.

The levy will generate an annual income of more than HK$20 million for the new body, which will need more than HK$30 million to operate independently, assuming more than 100,000 transactions are recorded each year on average.

Hong Kong Institute of Housing president Cora Yuen Chui-yi welcomed the announcement. "Apart from satisfying the [housing] quantity target, we also need to look at housing quality as well," she said.

Young said that a levy proportional to the price of the flat being sold would be too complicated. He said the levy would also cover flats with no management and those managed by owners' corporations only, which account for 40 per cent of the 40,000 private buildings in the city.

"We hope to raise the quality of housing management as a whole and encourage [residents of] buildings without management to set them up," Young said.

Another source of revenue will be the annual licence fee charged to management companies, set at about HK$2,000. Practitioners with a supervisory role will be charged between HK$800 and HK$1,500, depending on their academic qualifications.

The new body would be given HK$10 million to get itself up and running, Young said. A three-year transitional period will be afforded the city's existing 800 management companies, giving at least 10,000 managers time to catch up with the requirements.