Call for Hong Kong homebuyers to hire surveyors to check for illegal features

Hong Kong homebuyers should be required to hire a surveyor to check for illegal features on properties under proposed legal amendments that would hold owners liable for "severe" unauthorised structures, an industry leader has said.

Francis Lam Ka-fai, president of the Hong Kong Institute of Surveyors, said on Monday the proposed legislation should refer to a comparable framework in the United Kingdom.

In the UK, homebuyers wanting to buy a property on a mortgage must hire a building surveyor to submit a report of the construction and condition of the property, detailing its inspections and identifying potential issues, before its valuation.

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Lam said adopting this practice would ensure that real estate agents and lawyers, who might not have the technical knowledge about illegal structures, would not be unwittingly held liable.

According to the Royal Institution of Chartered Surveyors, the survey usually costs between £600 to £1000 (US$758 to US$1,260), depending on the property.

"In Hong Kong, this [should] extend to whether there are unauthorised works, or if low-load-bearing walls that should not be demolished have been taken down," Lam told a radio show. "If this is introduced, it can also protect the buyer’s rights."

In the proposed amendment to the Buildings Ordinance laid out on Friday, the Development Bureau introduced a new regulation that would require owners be held liable for having "severe" unauthorised structures on their property, regardless of whether they had built it.

They may face a fine of up to HK$2 million (US$257,220) and two years’ imprisonment if they are convicted of illegally building a basement or other significant structures.

Those who assist residents in taking ownership of properties with illegal structures, such as property agents and lawyers, could also be held accountable and face similar penalties.

Lam said the proposed high penalty would act as a deterrent for real estate agents and lawyers.

But Leo Cheung Sing-din, an adjunct associate professor in real estate at the University of Hong Kong, said mandating the surveyor inspection for all homes would slow down transactions in the property market given the number of flats sold daily.

Cheung said most banks currently required a mortgage valuation for risk assessment, but most were completed by a general practice surveyor looking at photos.

"Authorities can build on the current procedure and flag properties with a high risk of having unauthorised works, like an added basement, and only require those to have a building survey done," he said. "This will protect the buyer, while the seller will also have to be held accountable for doing those illegal works."

Under the existing ordinance, the government can only prosecute those who "knowingly" carry out building works without official approval, but owners who fell under suspicion often claimed they were ignorant about illegal structures built on their properties.

The bureau suggested removing the word to lower the prosecution threshold, while increasing the current maximum penalty of HK$400,000 to HK$2 million and keeping the maximum jail sentence at two years for "severe" illegal structures.

Lam agreed that the threshold should be lowered, saying contractors "ought to be penalised" for building severe illegal structures that were at risk of collapsing, such as in the case of Redhill Peninsula, an upscale development where unauthorised basements and other structures were found to have been built. The presence of the structures came into the spotlight after a landslide last year.

"As a professional, they should not do illegal things for the sake of making money," he said. "There is no use feigning ignorance and acting as if they don’t know those works are illegal. It is impossible to not know once they see the building plans."

Jacob Poon Tat-hang, from the Hong Kong Real Estate Agencies General Association, said a body regulated the industry and agents would not break the law knowingly.

"The Land Registry might reflect if there are any illegal structures or unauthorised use of government land, but not all agents can tell just by looking," he said on the same radio show.

He said the proposed amendments should clarify scenarios in which agents could be held responsible for the sales of buildings with illegal structures.

"For example, if the building owner is in the process of demolishing his illegal structures, or during the period where the Buildings Department is cancelling the statutory demolition order, will agents still be held liable?" he said.

Cheung of HKU agreed the penalty for property agents and lawyers involved in transactions of properties with illegal structures was "unnecessary" as both were regulated industries.

"They are only assisting with the transaction, so they should not have such a huge responsibility, unless there is suspicion of fraud or intention to mislead the buyer," he said.

Authorities should focus on targeting homeowners who constructed the illegal structures and conduct regular spot checks, instead of enforcing laws during the sales stage, he said.

This article originally appeared on the South China Morning Post (SCMP), the leading news media reporting on China and Asia. For more SCMP stories, please download our mobile app, follow us on Twitter, and like us on Facebook.

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