Effectiveness of statutory requirements on first-hand residential properties for protection of buyer interest

Abstract

Purchase of residential property in Hong Kong, no matter it is for accommodation or investment, is usually quite a big decision for most citizens in their life time. Since the price index and transaction cost are continually while the affordability of housing is relatively low as compared to most cities all over the world. Purchase of first-hand residential properties is even more special, as it is different from second hand property that most first-hand residential properties are sold under “Consent Scheme” when development projects are still under construction stage. Sometimes, no site visit is available and all information of the properties for buyers were provided by the developer of selling agencies. Such that buyers usually could hardly collect comprehensive information on their own. The market failure induced the Government, Consumer Council and respective associations in the property development industries to set up statutory requirements for the presentation of sale information and control of sale arrangement, so as to enhance protection of buyer interest. The Residential Properties (First-hand Sales) Ordinance Cap 621 was implemented in 2013 as a result, expected that the Ordinance could improve the fairness and transparency of property sale information and sale arrangement. After execution for years, there were different comments in the community. Particularly, Consumer Council opined that the Ordinance was still subject to review as there are loopholes and objectives of buyer protection could not be fulfilled as expected. This dissertation aims at revision for the expectation of buyer interest protection and finding out the gap between buyers’ expectation and the legislation. The expectation may not be fully covered by the legislation since the Legislation Council also obligate to balance the interest between buyers and property developers. A study of the similar statutory control measures in other countries will be conducted for comparison and evaluate the quality of buyers’ protection. Such that the effectiveness of the statutory control measures in Hong Kong could be concluded finally.