Frequently Asked Questions and Answers
Prospective purchasers of first-hand residential properties should ensure that the sales brochure so obtained is of the latest version. Under the Residential Properties (First-hand Sales) Ordinance (the Ordinance), a sales brochure must be printed, examined and revised within the previous three months.
Prospective purchasers should pay attention to the following information in a sales brochure:
- ”Relevant information”: It means information on any matter likely to materially affect the enjoyment of the residential property, which is known to the vendor but not to the public. For example, if the windows of a specified residential property in a development cannot be opened for noise protection or due to special circumstances in the surroundings, this information is considered as “relevant information likely to materially affect the enjoyment of the residential property, which is known to the vendor but not to the public”. However, documents which have been registered at the Lands Registry are not considered as “relevant information”.
- ”Cross-section plan”: It shows the level of the street as compared to the level of the lowest residential floor of the building, regardless of how the lowest residential floor of the building is named.
- ”Location plan”: It shows the location of the development, the name of every street situated within 250 metres from the boundary of the development, and every building, facility or structure situated within 250 metres from the boundary of the development that may affect or have impact on traffic, noise, air quality, ordour, environment, hygiene, fire safety, pedestrian flow and the daily living of residents.
- Whether the owners of the residential properties are required to share the expenses of managing, operating or maintaining the public facilities and public open spaces within or outside the boundary of the development, and the location of those public facilities and public open spaces.
- Whether the owners of the residential properties are required to maintain any slope at their own cost.
Prospective purchasers can, from “floor plans of residential properties in the development” in the sales brochure, check whether the kitchen in a residential unit is of open kitchen design. They can also check from the information on “fittings, finishes and appliances” in the sales brochure description on fire service installations and equipment, including smoke detector and sprinkler head, fitted in or near open kitchen.
Prospective purchasers should take note that owners of these units shall observe and comply with the fire safety regulations related to such fire service installations and equipment and any relevant provisions under the deed of mutual covenant. To comply with those requirements, expenses will be incurred. Also, owners should allow registered fire service installation contractors access to their units to carry out annual inspection and maintenance of the fire service installations and equipment.
Owners may check with the management offices to see if they assist owners in arranging annual inspection. They can also find relevant information on annual inspection and maintenance of the fire service installations and equipment on the website of the Fire Services Department (www.hkfsd.gov.hk).
On property management and management fee, the Ordinance requires vendors to set out in the sales brochures the person appointed as the manager of the development and a summary of the provisions of the draft deed of mutual covenant or the deed of mutual covenant, as applicable, which contains the basis on which property management fees are shared by owners of residential properties in the development.
For the sale of completed first-hand residential property, vendors must provide, in addition to the sales brochure, a “Vendor’s Information Form” (VIF) which must set out the amount of management fee payable for a specified residential property.
The Ordinance does not require vendors to set out the amount of management fee of each residential property in the sales brochure but rather require vendors to provide the amount in the VIF when the property is completed and is offered for sale. This is because the exact amount of management fee of an individual residential property will normally be confirmed only upon completion.
However, if the vendor has already worked out the exact amount of management fee of each residential property of the development when the property is offered for pre-sale, the vendor may set out the amount of management fee of every residential property in publications other than the sales brochure. Prospective purchasers of uncompleted property may ask the vendor or the estate agents on the availability of information on the amount of management fee of the residential property he would like to buy.
Under the Ordinance, when a vendor offers to sell the first-hand residential properties in a completed development, he must make available to the public the VIF in addition to the sales brochure. The VIF must set out information required under the Ordinance, including the amount of management fee; the amount of the Government rent payable for the residential property, the name of the owner’s incorporation (if any), the name of the manager of the development; any notice received by the vendor from the Government or management office concerning sums required to be contributed by the owners of the residential properties in the development, any notice received by the vendor from the Government or requiring the vendor to demolish or reinstate any part of the development, and any pending claim affecting the specified residential property that is known to the vendor.
When selling a first-hand residential property to an existing tenant who has been holding that property under a tenancy for at least a year, the vendor does not have to provide a sales brochure to that tenant if the latter agrees in writing that the vendor does not have to provide him with the sales brochure. In such circumstances, the vendor must provide the tenant with the VIF.
There are many provisions in the Government’s land grant and deed of mutual covenant (DMC). Government’s land grant sets out information such as the lot number of the land, the term of years under lease and the user restriction applicable to that land. The DMC provides information including common parts of the development, the term of years for which the manager of the development is appointed, the basis on which the management expenses are set and the area in the development retained by the owner for that owner’s own use (if any).
Under the Ordinance, vendors must make available at the sales office for prospective purchasers’ inspection free of charge a copy of the land grant and the DMC (or its latest draft).
When studying Government’s land grant and DMC, prospective purchasers may pay attention to matters such as whether owners are required to pay Government rent or whether pets are allowed to be kept in the residential property. As regards units with open kitchen, prospective purchasers may wish to find out whether the DMC provides any requirements in relation to the open kitchen that they need to observe and comply with.
Any advertisement purporting to promote the sale of any first-hand residential property which the Ordinance applies is under the regulation of the Ordinance. Advertisements are subject to strict requirements as set out in the Ordinance and must not contain false or misleading information. Also, any person who makes misrepresentation or disseminates false or misleading information commits an offence.
The Sale of First-hand Residential Properties Authority (SRPA) advises prospective purchasers that they should:
- Make use of the SRPA’s website, the Sales of First-hand Residential Properties Electronic Platform, and the Sales of First-hand Residential Properties Authority Resource Centre to access information on the sales of first-hand residential properties;
- read the “Notes to Purchasers of First-hand Residential Properties” published by the SRPA on issues they should pay attention to;
- make reference to the sales brochure, price list, the document containing the sales arrangements and the register of transactions;
- visit the development site to get a feel of its surroundings; note the saleable area of the residential property which he intends to purchase;
- view the unmodified show flat for comparison with the modified one when visiting show flats; and
- if in doubt about the information provided by the sales representatives of the vendor or any advantage/benefit they offer, verify with the persons concerned and request them to include such undertaking in the Preliminary Agreement for Sale and Purchase or Agreement for Sale and Purchase.
According to the practice circular issued by the Estate Agents Authority, when preparing promotional materials in relation to the promotion of the sale of a development, estate agents must ensure that the materials comply with the Residential Properties (First-hand Sales) Ordinance and are prepared with vendor’s prior written consent.