Estate Agents Regulator Warns Of Common Pitfalls

The regulator of estate agents in Hong Kong has warned of the pitfalls people face when they buy property outside Hong Kong.

William Leung, the chairman of the Estate Agents Authority, told RTHK’s Letter to Hong Kong that he noticed more and more people are purchasing non-local properties, but said they must watch out for a "pattern" for deals that may go wrong:

“First, the property concerned is uncompleted. Secondly, the purchase transaction is closed on remote basis with inadequate due diligence done by the buyer. Thirdly, attractive incentives or investment returns are offered by the foreign developer," Leung explained.

"When these three factors come together, it is highly likely that the investment would turn sour.”

Leung also said prospective buyers of foreign flats should use licensed agents. He said that since any agent that deals elusively with properties outside Hong Kong is not required by law to obtain a licence, they were not subject to oversight or discipline by the estate agents authority.

He also told buyers to be wary when it comes to claimed rental returns from properties.

"A developer's promise of investment return is sceptical. How can it realistically forecast the return before the development is completed, occupied, or even in operation? If the developer guarantees an attractive return, it is either taking a major business risk or is not serious with the offer," he said.

"Choosing to believe the guarantee at face value is again a risky decision.”