On Aug. 5, HK EAA shared competition practices for estate agents.
HK EAA issued circular on good and effective competition practices, concerning charging of commission and offering incentives in estate agency businesses.
Good Practices
Estate agencies are required to develop a written commission policy and provide clients with a detailed letter outlining commission rates, services offered, duration of service, and details of involved personnel before any sales or tenancy agreements.
Agencies are expected to issue clear guidelines for staff on incentives, maintain stringent supervision, establish appropriate procedures, keep records to ensure compliance, making these available upon request from the HK EAA.
Incentives offered by agencies must not prevent purchasers from making informed decisions or be abusive, especially when the agency holds significant market power.
Agencies must inform purchasers in writing of any incentives early in sales process through standardized incentive letter, which includes detailed terms and conditions.
Sep. 2024 Q&A
On Sep. 16, 2024, HK EAA issued Q&A on Practice circular on good and effective competition practices, re charging commission, offering incentives by estate agents.
The current guidelines on offering incentives, circulars no. 13-04 (CR) and 16-01 (CR), will remain effective alongside the new practice circular from Nov. 1, 2024.
The guidelines on commission practices (para 9 of practice circular) are recommended but not mandatory; estate agencies can set their own commission policies.
Estate agencies are not required to disclose detailed factors behind their commission policies to clients, as this constitutes competitively sensitive information.
Must honor incentives promised, whether these are made verbally or in writing.
If incentives are offered after the required timeline, the estate agency must still use a pro-forma incentive letter and honor their commitments as per the practice circular.
Estate agencies shall avoid focusing solely on incentives that could distract purchasers; those with significant market power must not engage in abusive practices.
Incentives, like cash rebates, cannot be tied to a percentage of the commission.
While HK EAA does not set specific deadlines for paying incentives, estate agencies must clearly outline timing and manner of payment in the pro-forma incentive letter.
