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Legal Update

Introduction of the Residential Properties (First-hand Sales) Bill to the Legislative Council

19 March 2012
Mayer Brown JSM Legal Update

On 20 December 2012, we published a legal update ("The Clock is Ticking: Be prepared for the forthcoming legislation to regulate the sale of first-hand residential flats in Hong Kong") which highlighted a few important measures proposed by the bill entitled the "Residential Properties (First-hand Sales) Bill" (the "Bill").

After the two-month consultation period, the Transport and Housing Bureau introduced the Bill into the Legislative Council on 16 March 2012. The first reading of the Bill is scheduled for 21 March 2012.

What are the major features of the Bill?

The Bill is primarily based on the recommendations of the Steering Committee on the Regulation of the Sale of First-hand Residential Properties by Legislation. Major features of the Bill include the following :-

  • All first-hand residential properties (including both completed and uncompleted properties) will be subject to the proposed legislation.

  • Setting out mandatory requirements for sales brochures, price lists, show flats and sales arrangements.

  • Requiring that saleable area be the only basis to quote property size and property price per square foot/metre in sales brochures, price lists and advertisements (this means that all gross floor area related information must not be disclosed).

  • Stipulating the time frame within which transaction information must be disclosed.

  • Making acts of misrepresentation and disseminating false or misleading information offences.

  • Setting out the penalties for offences, with the maximum penalty being a fine of HK$5 million and imprisonment for up to seven years.

  • Establishing an enforcement authority to monitor compliance of the proposed legislation.

What is the impact of the Bill?

According to the Government, the feedback received in the two-month public consultation period shows that there is "widespread support for the proposed legislation" and "there is also a clear consensus that the proposed legislation should be enacted as soon as possible".

However, some professional bodies and stakeholders have raised concerns that certain parts of the Bill may be unconstitutional for contravening the rights and freedom as guaranteed by the Basic Law and Bill of Rights, and that the general public who support the proposed legislation may not be aware of the technicality and complicated legal issues involved.

The Bill, if passed by the Legislative Council and signed by the Chief Executive, will become the first legislation in Hong Kong to regulate the sale of first-hand residential properties. Not only developers will be subject to the regulations imposed by the legislation, the general public may also be subject to some of the offences imposed by the Bill (e.g. misrepresentation and dissemination of misleading information).

To ensure that the fundamental rights and freedom as guaranteed by the Basic Law and Bill of Rights will not be infringed, it is important for the Legislative Council to review the Bill in detail, so as to ensure that the measures proposed in the legislation must be reasonable and proportionate to the legitimate purpose of the proposal (i.e. to protect purchasers in first-hand residential properties), and that the restrictions imposed are no more than necessary to accomplish such purpose.

Given the far-reaching impact of the proposed legislation, it is expected that the second reading debate on the Bill will be adjourned, and a Bills Committee will be set up to study the Bill in detail.

Want to know more about the Bill?

A full set of the Legislative Council Brief and the Bill can be downloaded in the Legislative Council website (

For inquiries related to this Legal Update, please contact Alan Yip, or your usual contacts with our firm.

Learn more about our Hong Kong office, Real Estate practice.

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