In the largest financial penalty meted out to a local property agency over foreign property deals, Dennis Wee Realty (DWR) has been fined a total of $66,000 for failing to abide by rules related to such deals.
The Council for Estate Agencies’ (CEA) Disciplinary Committee also added a restriction to DWR’s licence by disallowing the agency to transact or market foreign properties for 12 months.
The penalties were imposed for six charges of failing to provide a written advisory message to six groups of investors to draw their attention to risks involved in buying foreign properties. The written advisory is stated under paragraph 16 of the Practice Guidelines for Estate Agents and Salespersons Marketing Foreign Properties (PGMFP).
In 2014, the investors bought a total of 18 units in two hotel developments in Lymm and Knutsford in the United Kingdom (UK) through DWR. Subsequently, they made full payments totalling £1,641,000 (approximately S$3,374,400) to UK developers Hotel Options (Lymm) and Hotel Options (Knutsford).
But in early 2015, the developers entered into administration and the investors did not receive the amounts that were promised to them as investment returns.
Background to the case
Between April 2014 and September 2014, DWR conducted seminars in Singapore to market and sell the Ibis Budget Hotel located in Lymm and/or Ibis Budget Hotel located in Knutsford, Cheshire. DWR had exclusive rights to sell these UK properties in Singapore.
To invite members of the public to its seminars, DWR placed advertisements in The Straits Times over four weekends to publicise the seminars. DWR made false representations in their advertisements such as “Meet the developer” and other claims. This was despite the fact that DWR had known that the developers would not be attending the seminars.
Of the six groups of investors who eventually made purchases, four attended the seminars. At the seminars, DWR’s agents informed the investors that they would receive annual returns ranging from eight to 12 per cent for the first three years following their purchase and higher returns thereafter. They were also told that there was a guarantee by the developers to buy their properties back from the investors at the end of the three years.
The investors received monthly returns for periods ranging from one month to six months before payments ceased. Subsequently in early 2015, Hotel Options entered into administration in the UK.
To date, the investors have not been paid the remaining guaranteed annual monthly returns and the capital appreciation on the purchase price that they were promised.
A CEA spokesman said, “Throughout the property marketing process, DWR’s property agents did not provide the investors with a written advisory message stating that the investors must conduct due diligence. They did not highlight to the investors the risks that are involved for consumers buying foreign property, and that the transaction is subject to foreign laws and to any change in policies and rules in the UK.”