On 29 April 2015, the Sales of First-hand Residential Properties Authority ("SRPA") issued a new practice note No.PN01/15 ("New Practice Note") recommending that, from 1 June 2015 onwards, vendors of all first-hand residential developments should display in the sales offices on each date of sale a "consumption table" at a reasonably visible location to set out the following key information:-
- Total number of residential properties;
- Total number of residential properties sold before the date of sale;
- Total number of residential properties offered for sale on the date of sale;
- Total number of residential properties not offered for sale on the date of sale; and
- Description of all of the residential properties offered for
sale on the date of sale and the status of sale of each of such
residential properties, namely :
- whether it is available for selection;
- whether it has been selected by a prospective purchaser but a Preliminary Agreement for Sale and Purchase ("PASP") has yet to be signed; and
- whether it has been sold and a PASP has been signed.
The New Practice Note also makes the following suggestions to the vendors:-
- To provide the most up-to-date information as far as possible.
- When there is a change in the status of sale of the any of the residential properties, vendors should update the information in the consumption table as soon as possible after the change has taken place.
- When there is more than one sales office for a development, the vendors should make public the information in all the sales offices to ensure consistency.
- Vendors should ensure that the information is accurate.
The New Practice Note can be downloaded at this weblink: http://www.srpa.gov.hk/files/pdf/practice-notes/Practice_Notes_on_Flat_Availability_Eng.pdf
Guidelines vs Practice Note
To date, SRPA has issued a total of 6 guidelines, 7 practice notes, over a hundred of FAQs and 7 reminders and announcements for the trade.
It should be noted that only the guidelines issued by the SRPA pursuant to section 88 of the Residential Properties (First-hand Sales) Ordinance (the "Ordinance") has statutory (i.e. legal) effect. The source of power is section 88(1) of the Ordinance which provides that the SRPA may issue guidelines:-
- indicating the manner in which the SRPA proposes to perform any function or exercise any power; or
- providing guidance on the operation of any provision of the Ordinance.
The consequences of contravening the guidelines are provided in section 88(5) of the Ordinance :-
- A person does not incur any civil or criminal liability only because the person has contravened any of the guidelines.
- However, if, in any legal proceedings, the court is satisfied
that a guideline is relevant to determining a matter that is in
- the guideline is admissible in evidence in the proceedings; and
- proof that the person contravened or did not contravene the guideline may be relied on by any party to the proceedings as tending to establish or negate the matter.
Practice notes (and the FAQs and other reminders/ announcements for the trade) do not form part of the guidelines:-
- They are not issued pursuant to the Ordinance, nor were they referred to in the Ordinance.
- They are only the "best practices" recommended by the SRPA.
- Non-compliance of the practice notes will not be regarded as a contravention of the Ordinance or commission of an offence under the Ordinance.
To distinguish the requirements of the "practice notes" from those of the "guidelines", the requirements of "practice notes" are shown in italic in the practice notes.
All the contents of the New Practice Note issued on 29 April 2015 are shown italic, which means that the whole of the New Practice Note are the "best practices" recommended by the SRPA. As a matter of law, non-compliance with the contents of the New Practice Note do not constitute an offence under the Ordinance.
Upcoming Practice Note on Sales Arrangements
The Director of SRPA, Mr. Eugene Fung, also announced in the press release dated 29 April 2015 that:-
- The SRPA and the Estate Agents Authority (the "EAA") have been working closely to address the issue of the inflated number of registrations of intent in the sales of first-hand residential properties.
- When the EAA has finalised the arrangements for estate agents to declare the number of registrations of intent which have been issued, the SRPA will issue a practice note requiring vendors to make public the number of registrations of intent of which estate agents are the registrants if and when the vendors make public the number of registrations of intent or cashier orders they have received in respect of a development.
The Director also made the following comments in respect of certain sales arrangements commonly adopted by vendors of first-hand residential properties:-
- Vendors should arrange the balloting session and the flat selection session on 2 separate days.
- The arrangement for vendors to require registrants to attend the balloting session in person or else the registrants' eligibility for balloting be cancelled is unreasonable and unnecessary and such arrangement should not be deployed.
- The arrangement premised on a "first-come-first-served" basis may easily give rise to disputes among persons queuing on the spot and such arrangement is not encouraged by the SRPA.
The Director's comments and recommendations to enhance transparency of the sales arrangement are welcomed.
That said, there is no restriction under the Ordinance on the adoption of the above sales arrangements, so long as the vendors have complied with the mandatory requirements of the Ordinance, such as making available the price lsit and document containing sales arrangements at least 3 days before commencement of the sales.
It remains to be seen whether the above recommendations/comments will be incorporated into the forthcoming practice notes or FAQs.
While it is important for the SRPA to take appropriate measures to enhance transparency of the sales arrangement, we consider that it is equally important to respect the vendors' freedom and flexibility in designing the most suitable sales arrangements for different residential developments so long as they are not expressly restricted under the Ordinance.
Originally published April 2015
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