Dangers in foreign home deals

Local | Sophie Hui Feb 15, 2018
Homes left unfinished and people failing to secure mortgages - these are the problems Hongkongers get into when buying overseas properties.

So the Consumer Council is warning people to be extremely careful when buying overseas.

That comes after it received 35 complaints last year compared to 16 in 2016, and it already has had five this year.

In one case complainant Ms Chan made a deal through an agent in Hong Kong for a British property being built and costing 67,000 (HK$724,000). She paid half the price as a down payment.

The property was to be completed in the third quarter of last year, but there was just a construction site in July. In September, Chan learnt construction had halted as the builder had debt problems.

Another company was appointed to handle compensation, but the Hong Kong agent and a lawyer in the transaction could not provide further information.

Chan sought help from the council in a bid for compensation. But the agent told the council the dispute was between Chan and the developer.

The council suggested Chan seek legal advice as the case involved an overseas developer and there were complicated legal issues.

In another case, buyer Mr Fong went for a property said to be worth A$390,000 (HK$2.37 million) at a sales exhibition on Australian properties organized by a Hong Kong firm.

An agent said Fong could obtain an 80-percent mortgage if he had sufficient income or HK$1 million in his bank.

Fong paid HK$20,000 as a "reservation fee" and transferred a deposit of A$30,000 to the developer a few days later.

But Fong ended up only getting AU$240,000 for a mortgage as the firm in Australia valued the property at only AU$320,000.

It was beyond his means, Fong complained to the council, and he later received a partial refund.

Council chief executive Gilly Wong Fung-han also said a complainant spent HK$4 million to buy two US properties for leasing out, and a management firm was supposed to help collect rents. But he did not have any returns in three years.

Wong Kam-fai, chairman of the council's trade practices and consumer complaints review committee, suggested prospective buyers should consult friends or relatives living overseas for details of a property market and sales and purchase procedures.

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January 2019