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Purchasing properties situated outside Hong Kong, especially uncompleted ones, is very complicated. Consumers should stay vigilant and study all related information before making a purchase decision so that their own interests can be protected.

The EAA reminds consumers that there is no legal requirement that the transactions of properties situated outside Hong Kong be handled by licensed estate agents.

Even if the transactions are handled by licensed estate agents who are regulated by the EAA, the EAA’s functions do not include representing or assisting purchasers to recover any losses suffered from the transactions.

Consumers may have to bear extra risk for purchasing uncompleted properties situated outside Hong Kong, as estate agents cannot guarantee whether the developer is able to complete the construction on schedule. Consumers may need to negotiate with the developer themselves if the property fails to be completed on time.

Consumers will need to seek their own legal advice as to whether they can recover losses from the respective estate agents.

Before deciding to purchase overseas property, consumers should consider the following points:

1. Select property location:

• local economy, exchange rate fluctuation, current property price and property market outlook
• culture and language
• investment restrictions on foreigners
• local regulations related to property purchasing, reselling and tenancy
• What are the objectives and requirements for the purchase? For example, the considerations will differ depending on whether the property is intended for investment or for immigration purpose.

2. Mindful of property details:

• A comparison between purchasing uncompleted and completed properties
• Developer’s financial ability and background (be aware that the scale of property developers may differ from those in Hong Kong)
• Property ownership – whole or shared
• Term of lease
• Whether the project is under “Collective Investment Scheme” regulated by the Securities and Futures Ordinance (“SFO”) and whether it complies with the requirements of the SFO
• The quality of the property, construction materials, facilities inside and outside the property, etc.
• The infrastructure and ancillary facilities in the vicinity areas
• Neighbourhood and surrounding community
• Better to pay a site visit in person
• Any recurrent expenses after purchasing the property (e.g. regular maintenance and management fee, government rent, property tax)
• Local laws relating to the property management (regulations on a house and a condominium may differ)

3. Aware of the purchase methods:

• To visit the place in person and purchase from the seller directly; or
• Purchase through a licensed estate agent in Hong Kong? or
• Through a non-licensed agent representing the seller?
• The EAA only regulates the conduct of licensed estate agents and cannot represent purchasers to recover their losses
• Non-licensees selling properties situated outside Hong Kong are not regulated by the EAA
• How to know if an agent is a licensee of the EAA? Please make use of the “Licence List” at the EAA’s website
• Please remain vigilant even if the property is purchased through a licensed estate agent
• The Practice Circular (No. 23-02(CR)) stipulated by the EAA sets out extensive guidelines on the sale of uncompleted properties situated outside Hong Kong by licensed estate agents, including requiring licensees to obtain legal opinion issued by a lawyer practising in the place where the properties are situated, as well as requirements on the issuance of advertisements and sales information sheets.
• Even if licensed estate agents have complied with the Practice Circular, there is no guarantee that the property developer can assign the property on schedule. If the developer fails to complete the construction, the EAA will not be able to assist purchasers to recover damages.

4. Review your financing arrangement:

• Be aware of the payment method designated by the developer
• The conditions for releasing the deposit paid to the developer
• As purchasers may not be granted mortgage loans in Hong Kong for their properties situated outside the territories, you will need to find out more about the requirements and restrictions imposed by local financial institutions and the related regulations on mortgage applications by non-local purchasers.
• The impact of the exchange rate

5. Think about return of investment:

• Restrictions on investors or non-residents’ capital liquidity (e.g. foreign exchange control) imposed by the local government
• Local property-related tax system (e.g. property tax, property appreciation tax, profit tax or even estate duty)
• Fees payable for attorney and other professional services (including agent’s commission)
• Whether the guaranteed return on investment offered by the developer is legally protected and note the developer’s ability to fulfill its promise
• The rental income may differ from what is promoted. You need to study the local tenancy market as well as the supply and demand of properties
• Pay attention to the transaction data of local properties in the secondary market if your plan is to invest or resell the property
• Take the reselling cost into consideration also, e.g. tax, other professional fees, and also restrictions on reselling