ARTICLE
10 November 2009

Property Law – Revised Guidelines On Sales Brochures

Prospective buyers of new apartment developments in Hong Kong are often misled by artists’ impressions of grand clubhouses, photos of unobstructed sea views or lush greeneries appearing in sales brochures even though the development sites are actually located near public residential housing, landfill sites or sewage treatment plants.
Hong Kong Real Estate and Construction
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Introduction

Prospective buyers of new apartment developments in Hong Kong are often misled by artists' impressions of grand clubhouses, photos of unobstructed sea views or lush greeneries appearing in sales brochures even though the development sites are actually located near public residential housing, landfill sites or sewage treatment plants. To protect prospective flat buyers, following criticisms on developers who often provide misleading information or photos on advertisements and brochures, the Real Estate Developers Association of Hong Kong ("REDA") has on 7 October 2009 issued a new set of guidelines for sales descriptions and information in sales brochures and advertisements of uncompleted residential properties with effect from November 2009 ("Guidelines").

The Guidelines

The new Guidelines include :-

  1. For each uncompleted first-hand residential development under the Lands Department's Consent Scheme, all information as required under the Consent Scheme, the presale consent letter and REDA's guidelines (as appropriate) should be contained in one booklet entitled "sales brochure". Any other booklets (e.g. promotional materials) made available to the prospective purchasers should not be called a "sales brochure".
  2. The sales brochures must not include any promotional materials including artist impression pictures or graphics.
  3. The sales brochures can include a one-page to-scale close-up picture showing the outer appearance or building elevation of the development, but this has to be endorsed by the appointed architect.
  4. The sales brochures should contain the property information following the sequence as far as possible as set out in the Guidelines.
  5. The location plan should provide information on nearby communal facilities and features, even unpopular facilities such as refuse collection points, cargo working area, ventilation shafts, slaughterhouses, crematoriums, addiction treatment centers, prisons etc. Under the Guidelines, a total of 34 facilities should be specified if they are near the development, compared with only 16 required by the old guidelines.
  6. The location plan and Outline Zoning Plan should follow the dimensional requirements and be in the font size stipulated in the Guidelines.
  7. The Area Schedule of the Units should follow the area presentation format in the standardized price list template of REDA.
  8. The public open space or public facilities should be coloured or shown in accordance with the format as stipulated in the Government Lease.
  9. Details of all important service agreements agreed prior to delivery of the Units, including the telecommunications services, should be listed out explicitly.
  10. Developers should provide a Chinese translation of the salient points of the Deed of Mutual Covenant and put a statement in both English and Chinese stating that "where there is discrepancy in meaning between the English and Chinese versions, the English version shall prevail".

In addition, printed promotional materials and advertisements of uncompleted first-hand residential development with artistic impression of the development and/or its surrounding areas (which must not be part of the sales brochures) must now contain a statement advising prospective buyers to make on-site visit for a better understanding of the development site, its surrounding environment and the public facilities nearby and to read the sales brochures for actual details of the development.

Conclusion

Sales brochures bearing a "Printing Date" from November 2009 will be subject to the Guidelines. The Guidelines will encourage clarity and completeness of information in sales brochures and promotional materials and ensure prospective buyers get more accurate information. Some argued that developers may still continue to use creative graphics in promotional materials such as television advertisements or create illusional images to induce buyers. Prospective flat buyers are thus strongly advised to read sales brochures in detail and not rely on visual images alone.

Also currently, developers are only required to give interested buyers sales brochures 24 hours before the launch of sales and it has been suggested that such time need to be extended to enable the buyers more time to read the complicated brochures.

Experienced lawyers in our Property Department will be happy to assist with any queries you may have regarding the above article or on any property and tenancy matters.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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