Centaline’s wily bet on a coveted relaxation of Hong Kong’s property rules lands it in hot water
- Centaline Property Agency and its Ricacorp Properties unit are letting homebuyers and sellers walk away from their contracts if some conditions are not met
- The memorandum is “inappropriate,” the industry guild said, while a lawyer describes the terms as “vague”
One of Hong Kong’s biggest property sales agencies has landed itself in hot water over a wily move to spur transactions, as anticipation runs high for the government to relax its real estate rules.
Home prices will almost certainly jump if Hong Kong’s Chief Executive John Lee Ka-chiu scraps a set of regulations during his address on October 25. If that happens, buyers and sellers can walk away from their pre-address contracts without penalty, according to a memorandum provided by Centaline Property Agency and its Ricacorp Properties subsidiary, seen by the Post.
The Estate Agents Authority (EAA), an industry-run statutory guild for sales agents, was quick to weigh in, calling the unusual hedge by Centaline and Ricacorp “inappropriate.”
The memorandum “may lead to legal disputes and cause confusion in the property market,” the EAA said in a statement, adding that its arrangement and terms “may involve evasion of taxes and/or other legal liabilities. The EAA is looking into whether the use of such a memorandum may have breached the EAA’s guidelines and will take follow up actions accordingly.”
Centaline, which employs 4,280 agents at 380 branches across Hong Kong, is standing firm. The agency chain’s founder Shih Wing-ching rejected any accusation of tax evasion, saying that his barristers “agreed there is no problem” with the memorandum.
“It’s not a hard rule,” he said in an interview with the Post. “It is actually the market condition that [necessitates]” the unorthodox arrangement, he added.