May 14 (Bloomberg) -- Hong Kong rules on new home sales, including the use of show apartments and disclosing transactions that involve senior company executives, will take effect on June 1, the government said, as it seeks to curb surging prices.
The rules will apply to all new apartments and show flats, the city’s Transport and Housing Secretary Eva Cheng said in televised comments today. Show flats are walk-through models of apartments that developers use to entice buyers before a building is completed.
Hong Kong has been stepping up measures to cool its property market, where prices of existing homes have risen to a 12-year high. Apart from raising stamp duties on luxury home transactions and increasing land supply, the government is also clamping down on developers’ sales tactics to boost transparency.
The government, which consulted developers on the proposed rules, rejected most of their suggestions, Cheng said.
The only adjustment it made is that developers won’t have to publish asking prices three days before starting to sell whole buildings or entire housing projects, as these don’t involve public transactions, Cheng said. They will have to disclose details within five days after a sale, she added.
“This doesn’t mean that we are backing down,” Cheng said.
One of the measures that will take effect is that developers must provide a show flat that will be in the exact same condition as when the home is built and ready for delivery, according to the nine rules spelt out by Financial Secretary John Tsang on April 21.
The following is a list of the nine measures:
Developers must abide by all regulations stipulated by the Real Estate Developers Association when selling new homes, regardless of whether the construction has been completed.
Developers must provide an on-site apartment when selling new homes that are completed for the public to view.
Developers have to announce sales details within five days. They also have to disclose transactions involving board members and their relatives.
Show flats must fulfill a series of requirements, including: providing at least one model apartment in which the layout, decorative materials and complimentary facilities are exactly the same as when the homes are ready for delivery.
The first price list must cover more homes. For smaller developments, the list must cover at least 30 units or 30 percent of the units available for sale, whichever is higher. Bigger projects would cover at least 50 homes or 50 percent of those available for sale, whichever is higher.
Manuals must be issued to home buyers seven days before sales begin, instead of 24 hours now.
Developers must announce the prices of homes three days before selling any number of units to anyone.
Promotional materials of the projects must provide clear information of the locations and addresses.
Developers must simultaneously upload the projects’ manuals and all the price lists on their websites.