HONG KONG 2004 - Housing

The private residential market picked up markedly in 2004. Notwithstanding a slowdown in the second quarter, the overall residential price index at the end of 2004 rose by over 26 per cent compared to the year before. Transaction volume registered an even stronger growth, with the number of residential property transaction rising by 41 per cent from 71 576 in 2003 to 100 630 in 2004, the highest level since 1997.

The Landlord and Tenant (Consolidation) Ordinance previously provided for security of tenure for tenants of domestic properties. Under these provisions, if a tenant wished to renew the tenancy and was willing to pay the prevailing market rent, the landlord would have to agree to the tenancy renewal. Only on certain exceptional grounds could the landlord refuse to renew the tenancy. These provisions were no longer justified in the face of an ample supply of rental units and fallen rentals, and had impeded market efficiency. In line with the Government's policy of minimising intervention in the operation of the property market, the Government introduced an amendment bill in 2003 to remove these provisions. Following the passage of the bill at the Legislative Council, the amendment ordinance came into effect in July 2004.

The Estate Agents Authority (EAA) devises licensing arrangements and practice directions for estate agents. Under the Estate Agents (Licensing) Regulation, all estate agents are required to obtain a licence to practise.

Two other regulations — the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation and the Estate Agents (Determination of Commission Disputes) Regulation — also regulate the industry. The former stipulates rules relating to the conduct, duties and practice of licensed estate agents while the latter prescribes rules and procedures for the EAA to assist in the mediation of disputes between an agent and a client. The Estate Agents (Registration of Determination and Appeal) Regulation prescribes the procedural rules for the EAA to adjudicate in disputes on the amount of commissions payable to estate agents and for aggrieved parties to lodge appeals.

Developers of private residential units may obtain the Director of Lands' approval to put units up for sale before they are completed. Potential purchasers of these uncompleted residential properties may refer to the information provided in sales brochures or check out other sources of information in the public domain or seek professional advice before deciding whether or not to buy a property. The Government, the Real Estate Developers Association of Hong Kong and the Consumer Council have jointly set up a mechanism to ensure that information in sales brochures is adequate and accurate.