PC Submission to First Hand Property Sale Consultation
Dear friends and members,
In response to the consultation in relation to the First Hand Residential Property Sale Bill, our inputs in the form of letter to Secretary for Transport and Housing Bureau have been submitted as follow.
The Professional Commons
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Dear Ms Cheng,
We are the ProCommons, a professional think-tank for the general public. This is in response to the consultation related to the First Hand Residential Property Sale Bill. The following are our inputs.
We strongly support the proposal of the Steering Committee (page 61 of the Steering Committee Report), and the adoption by the Government, the idea of borrowing some concepts from the Securities and Futures Ordinance in drafting the above property law. Among many of us, purchasing a residential flat is a great investment not less than our investments in the stock and future markets. We are happy to see that the Government can appreciate the relevancy between the two markets.
Under this premise, we would like to make two suggestions in strengthening the Bill:
First, add an offence of withholding material information that would affect the price level of residential properties. This is what we called “insider information” in securities law. Prohibition of withholding material information and prohibition of the release of misleading information are in fact two sides of a coin. The Bill included the latter but not the former.
Experience of the securities law suggested that if there was onlya prohibition of release of misleading information without the prohibition of withholding material information, the company would be inclined to withhold a lot of information in order to avoid violation of the former provision, which is detrimental to the investors. This would make investors trading in the dark. Therefore, the property law should also make it an offence to withhold material information that would affect the price level of the properties. For example, when there is a rubbish land fill nearby. Or the property is within a flooding area. Adding this provision can help to create a fair market.
Second, the Bill should also borrow the concept in the securities law and add the provision that the Enforcement Authority should have the power to initiate civil proceedings, in addition to criminal proceedings, against offenders.
Collaboration for the manipulation of property price can be concluded during a golf game. In such situation, it may be difficult to find evidence beyond reasonable doubt (i.e. criminal standard). Providing a civil tool, in addition to the criminal tool, to the Enforcement Authority can help to create successful enforcement cases in order to develop a compliance culture within the property market. This was also our experience in the security market.
We believe that these two additional provisions are critical to the success of the property law.
Yours sincerely,
Victor Wai
Vice Chairman
The Professional Commons