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Property Management Services Bill — A Proposed Mandatory Licensing Regime To Regulate The Property Management Industry




by:
Fun Kuen Au
Mayer Brown JSM - Hong Kong Office

 
June 19, 2014

Previously published on June 18, 2014

The Property Management Services Bill (the "Bill") was gazetted on 25 April 2014.

The Bill proposes a mandatory licensing regime to regulate the provision of property management services, under the supervision of a Property Management Services Authority (the "Authority"). It is proposed to make it a criminal offence for a property management company ("PMC") or a practitioner ("PMP") to practise without a licence.

The Bill received its first reading on 7 May 2014, and on 9 May 2014 a Bills Committee was set up to scrutinise the Bill.

Main features of the Bill

  • Exemption. Owners' corporations or other forms of owners' organizations managing their own properties will not be required to obtain PMC licences. Similarly, the provision of property management services by owners of the properties themselves will not be subject to the licensing regime provided that they are individuals and do not provide any property management services to another property for profit.
  • PMC licence. A PMC providing two or more types of property management services must obtain a licence. To obtain a licence, a PMC must have a minimum number of directors and employees who are licensed PMPs.
  • PMP licence. A PMP who assumes a managerial or supervisory role relating to property management services provided by a PMC must obtain a licence. Two tiers (Tier 1 and Tier 2) of PMP licences will be issued to distinguish PMPs with different levels of academic and professional qualifications and work experience. Front line staff will not be required to obtain licences.
  • Codes of conduct. The Authority will issue codes of conduct to encourage conformance to a single set of industry standards.
  • Public register of licensees. The Authority will maintain a register of licensees containing basic information on licensees for free public inspection.
  • Duty to provide information. A licensee must provide certain prescribed information (e.g. financial information and conflicts of interests) to its clients. Additionally, a licensee must notify the Authority of any update to the prescribed information.
  • Enforcement. The Authority may conduct an investigation into a suspected disciplinary offence upon receipt of a complaint or on its own initiative. The Authority may request information and documents from any person who may be able to assist in an investigation, and require that person to attend before an investigator to answer questions or respond to any written question relevant to the investigation. Failure to co-operate with the Authority without reasonable excuse is a criminal offence under the Bill.
  • Penalties. The Bill empowers the Authority to make disciplinary orders against a licensee for a disciplinary offence. Penalties range from a verbal warning to a maximum fine of HK$300,000, and include imposition of an additional condition in the licence, or suspension or revocation of a licence
  • Criminal offences. The Bill creates a number of criminal offences relating to practising without a licence or providing false or misleading information to the Authority. The maximum penalty is a fine of HK$500,000 and imprisonment for two years.
  • Levy. The Authority will be a self-financing body supported by income from licence fees and a fixed levy (tentatively around HK$200 - HK$350) to be imposed on each conveyance on sale chargeable to stamp duty.

The Authority

The Authority will assume the dual functions of a licensing body and an industry promoter. The Authority consists of the Chairperson, a Vice-chairperson and not more than 18 members appointed by the Chief Executive of the Hong Kong SAR.

Subsidiary legislation and transitional period

After the Bill is passed into law, the Administration will propose subsidiary legislation which will cover the detailed licensing criteria and the levy to be imposed.
It is proposed to allow a three-year transitional period after the enactment of the subsidiary legislation. During the transitional period:

  • A PMP who already meets the prescribed licensing criteria may apply for a formal licence.
  • A PMP who meets certain basic requirements will be granted a provisional licence, which may subsequently be converted into a formal licence upon completion of continuing professional development courses.

Impact of Bill and preparation for implementation

According to the Administration, the Bill received broad support from the 18 District Councils and the industry. The Administration anticipates that the Bill will lead to an improvement in the quality of property management services, promote integrity, competence and professionalism among PMPs, and enhance the overall status of the profession.

However, the Administration has still not yet published its detailed proposal on the licensing criteria for PMCs and PMPs (both Tier 1 and Tier 2).
To enable a smooth transition to the licensing regime in anticipation of the enactment of the Bill, developers and property management companies should be ready to begin planning for compliance by reviewing the qualifications of staff in their employment and, if necessary, making arrangements for their staff to attain the desired qualifications.

Further details on the Bill

A full set of the Legislative Council Brief and the Bill is available on the Legislative Council's website.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Fun Kuen Au
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Real Estate
 
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