LCQ22: Regulation of the sale of sub-divided commercial units

Following is a question by the Hon Alice Mak and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (July 13):

In recent years, some owners of commercial units have sub-divided their units into smaller ones (commonly known as “sub-divided shops”) for sale.  Over the past few months, quite a number of minority property owners who purchased such sub-divided shops have complained to me, claiming that earlier on, they had been misled by estate agents into purchasing sub-divided shops.  After they had taken vacant possession of those sub-divided shops, they discovered that the shopping malls in which their shops were located had problems in various aspects such as fireman’s access and emergency lighting.  In this connection, will the Government inform this Council, over the past five years:

(1) of (i) the respective numbers of applications, received, approved and rejected by the Buildings Department (BD), from owners of commercial units for sub-dividing their units, and (ii) the total number of sub-divided shops involved in the approved applications, with a breakdown by area (20 square feet (sq. ft.) or below, 21 to 40 sq. ft., 41 to 60 sq. ft. and over 60 sq. ft.) (and set out a breakdown of the aforesaid information by the District Council (DC) district in which the sub-divided shops were located);
(2) of the respective numbers of inspections on sub-divided shops conducted by officers of BD and the Fire Services Department as well as the respective numbers of prosecutions instituted under the Fire Safety (Commercial Premises) Ordinance (Cap. 502) and the Buildings Ordinance (Cap. 123) (and set out a breakdown of the aforesaid information by the DC district in which the sub-divided shops were located);

(3) of (i) the number of complaints received by the Estate Agents Authority (EAA) about the sale of commercial units by estate agents using unscrupulous sales practices, (ii) the respective numbers of complaints into which investigations were initiated and completed by EAA, and (iii) the number of prosecutions instituted by EAA against estate agents and the relevant offence provisions invoked (and set out a breakdown of the aforesaid information by type of complaints); and

(4) of (i) the number of complaints about transactions of commercial units received by EAA and (ii) the number of such complaints into which investigations were initiated and the total transaction amount involved (and set out a breakdown of the aforesaid information by type of complaints)?

Under the Buildings Ordinance (Cap. 123), building works shall comply with the relevant requirements on fire and building safety, as well as other applicable statutory requirements. Regarding works which are not exempted works or minor works under the Buildings Ordinance, approval of the relevant building plans and consent from the Buildings Department (BD) are required before commencement of the works. In addition, the Fire Services Department (FSD) will examine the plans of building works of the relevant buildings or premises and require the provision of necessary fire service installations and equipment in the building or premises according to the Code of Practice for Minimum Fire Service Installations and Equipment.

Besides, estate agents should, in the course of business, protect their clients against misrepresentation in connection with real estate transactions. The Estate Agents Authority (EAA) will take disciplinary sanctions against estate agents who are proved to be in default.

In consultation with the relevant bureaux/departments, I provide a consolidated reply as follows:

 (1) The BD does not keep statistics in relation to the approval of building works associated with the sub-division of commercial units.

 (2) The BD and FSD do not keep inspection and prosecution statistics concerning sub-divided commercial units.
 (3) and (4): From 2011 to 2015, EAA received a total of 55 complaints about transactions involving commercial units in shopping malls.  All these cases are about the use of improper sales tactics by estate agents.  Amongst these 55 complaints, the investigation of 54 cases was completed with ten cases found substantiated. The EAA is going to initiate inquiry hearing for the remaining case.

The ten substantiated complaints mentioned above are mainly related to the provision of inaccurate or misleading information/ statement by estate agents concerning the area of property, conditions of property (such as restrictions on the use of property, shop location, fittings or utilities provisions, etc.), and mortgage information.  The EAA has already taken disciplinary sanctions against the estate agents concerned.

The EAA does not have any information on the transaction amount involved in the cases mentioned above.

Ends/Wednesday, July 13, 2016
Issued at HKT 14:30