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Following is a question by the Hon Mrs Regina Ip and a written reply by the Secretary for Transport and Housing, Ms Eva Cheng, in the Legislative Council today (June 27):
Question:
Some members of the public have written to me to express dissatisfaction with the sales arrangement for a private residential project, namely "Heya Green" (HG), developed by the Hong Kong Housing Society (HS). They have pointed out that as the materials used for the flats of HG (HG flats) are of high quality and their selling prices are reasonable, the market has reacted enthusiastically with over a thousand potential purchasers queuing overnight for viewing the show flats. They have also pointed out that while the project is already extremely attractive, HS still offers estate agents a commission of 2% to 2.5% for every successful sales transaction, which may indirectly push up the selling prices and the practice is unreasonable. They opined that HS should benefit the purchasers who are members of the public, not the estate agents. In this connection, will the Government inform this Council:
(a) given that members of the public have proposed that HS should return the full amount of commission to the purchasers who are members of the public (by deducting from the selling prices of HG flats the equivalent amount of the commission), or use this amount of money to subsidise other development projects of HS, whether the authorities have assessed the feasibility of these proposals; if they have, of the results; if they cannot implement these proposals, the reasons for that; and the details of the measures adopted by the authorities in response to these aspirations;
(b) whether it knows the total amount of the aforesaid commission payable by HS; of the land premium concessions provided to HS by the Government in respect of HG as well as the respective land premium concessions provided by the Government to the residential projects of HS in the past five years; and
(c) whether the authorities have the power to monitor the arrangements for appointing estate agents by HS and paying them commission; if yes, of the specific details; if not, the reasons for that, and whether they will consider monitoring such arrangements?
Reply:
President,
The Hong Kong Housing Society (HKHS) is an independent organisation providing housing for and related services to the residents of Hong Kong. Heya Green is a private residential project developed by HKHS. It is one of six urban redevelopment projects entrusted to the HKHS (the entrusted projects) by the Urban Renewal Authority (URA) under a Memorandum of Understanding (MoU) signed by URA and HKHS in December 2002 on strategic cooperation between the two organisations to facilitate implementation of the urban renewal programme. The strategic partnership is one of the recommendations in the "Report on the Review of the Institutional Framework for Public Housing" published by the Government in June 2002.
We have consulted the Development Bureau, Lands Department (LandsD) and HKHS in preparing the reply to this question. The coordinated reply to the three parts of the question is as follows:
(a) and (c) The entrusted projects are implemented under the legal framework of the Urban Renewal Authority Ordinance (Cap 563) (URAO) and the repealed Land Development Corporation Ordinance (Cap 15). According to the MoU, in the implementation of the entrusted projects, while HKHS will observe and comply with the URAO and the Urban Renewal Strategy and will follow the prevailing policies of the URA on acquisition and compensation, HKHS is autonomous in the other aspects of the projects, including project planning, construction, promotion, marketing and sale or letting or other form of disposal of the premises in the new developments. HKHS will meet all the costs and expenses involved and will be entitled to obtaining returns or be responsible for the deficits of the entrusted projects. The commissioning of estate agents to promote and market the sale of Heya Green flats at a fee is thus an aspect that falls within the autonomy of the HKHS.
HKHS has pointed out that Heya Green is launched as a private residential project and appointing estate agents to promote the sale is normal market practice. HKHS has further advised that the agency fee represents only a small portion of the total development cost of the project. In any case, the commissioning of estate agents and the payment of agency fees to them have no correlation with the selling price of the flats, which was determined having regard to first and second hand market transactions, the latest property price indexes and prevailing market condition, and the sales packages including payment terms offered by private developers for marketing their first hand residential developments.
(b) HKHS has advised that the total amount of commission fees paid or payable to the estate agents for the sale of the Heya Green development is in the region of $30 million.
According to the LandsD, in the past five years, there were these six urban renewal projects granted to HKHS at nominal premium of $1,000. The amount of land premium foregone for the project site of Heya Green at Po On Road/Wai Wai Road (K25) is $131 million. The total land premium foregone for the other five urban renewal projects entrusted to HKHS, namely, the Castle Peak Road/Cheung Wah Street (K20) project, the Un Chau Street/Hing Wah Street/Castle Peak Road (K21) project, the Hing Wah Street/Un Chau Street/Fuk Wing Street (K22) project, the Castle Peak Road/Hing Wah Street (K23) project and the Shau Kei Wan Road (H21) project, is $809 million.
Ends/Wednesday, June 27, 2012
Issued at HKT 12:55
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