Developer cheats face jail terms

UNSCRUPULOUS property developers face possible jail terms - and massive fines - under tough legislation outlined yesterday to stop cheating and malpractice in the real estate industry.

A Law Reform Commission sub-committee said it believed it was now imperative to provide greater protection to flat buyers.

Its chairman, Professor Derek Roebuck, said many purchasers of uncompleted residential units had been buying ''blind'' and were unable to verify the exact details of their dwelling.

He also expressed surprise consumer protection laws did not already exist in Hong Kong for property purchases.

The Consumer Council last night said a key plank of the report - the proposal for full disclosure for ''buy-back'' arrangements under internal sales - might serve to counter the apparent hoarding of flats and reduce speculative pressure in the market.

''We have been persuaded that there is a need for those people who buy flats to have access to accurate information,'' Professor Roebuck said.

''They also need to be protected.

''There is evidence of a careless presentation of information and what we hope to do is raise the level of information to that of the best developers.

''There has been much more than carelessness.'' The report's major recommendations are: Gross floor area measurements be standardised in legislation.

Saleable areas be subject to a mandatory definition.

Sales brochures reveal full particulars of the property including fittings, pipes and finishings.

The Deed of Mutual Covenant lists all ''salient'' points about the flat and be available for inspection, in English and Chinese.

Jail terms and ''sufficiently heavy'' fines be imposed for legal breaches.

Imposing a three-day ''cooling-off'' period for buyers of flats under a ''non-consent'' development.

The report urged that prices of all units be advertised at least three days before the day of registration for balloting as well as publicising the overall number of units for sale.

It said developers should inform prospective purchasers if certain units were being reserved for internal sale - concluding that up to 50 per cent of flats in some blocks had previously been retained for ''private'' placement; creating a possible false market.

It suggested standardising gross floor area to exclude from unit measurements air-conditioning, mechanical rooms, refuse chambers, pump rooms, water tanks, transformer rooms, lift machine rooms and staircases and lifts which passed through car parks.

The report also argued for tight guidelines to cover floor plans on the sales brochures of uncompleted flats.

This was needed to counter the ''shrunk flat'' syndrome.

In some cases, the report suggested, flats were found to have a living space of less than half of that advertised.

The report's authors pressed for precise specifications of fittings and furnishings to be openly declared, including the brand and country of origin of all materials.

There is a recommendation for the date of completion and the issuing of an occupation permit to be gazetted.

The report said all charges and financial arrangements should be expressed in sales brochures.

The Real Estate Developers' Association last night refused to comment until its members had studied the report.

However, Consumer Council chief executive Pamela Chan Wong Shui said she was pleased with the way the report sought to protect flat purchasers.

''We welcome the recommendations in this report,'' Mrs Chan said.

''I think there are a number of features in the report which have addressed the concerns of purchasers.'' The sub-committee - with representation from housing, property development, lands and planning sectors - began deliberations in November 1992 and held 17 meetings.

Its report will be open to public comment but submissions close on June 30.

Once this information is assessed, the Law Reform Commission will consider an amended document before urging implementation.