Dennis Wee Realty fined record $66,000.
Property firm Dennis Wee Realty (DWR) has been fined a record $66,000 for not highlighting to investors the risks involved in buying overseas property.
The firm was also banned from transacting or marketing property abroad for 12 months with effect from Nov 24.
The fine is the largest penalty meted out by the Council for Estate Agencies (CEA) to a property agency for failing to abide by regulations on the sale or marketing of overseas real estate.
It said in a statement yesterday that DWR is liable for "six charges of failing to provide a written advisory message to six sets of investors to draw their attention to the risks involved in purchasing foreign properties".
It added: "Throughout the marketing process, DWR's agents did not provide a written advisory message stating that the investors must conduct due diligence.
"They did not highlight 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."
In 2014, investors had bought 18 units in two hotel developments in Britain through DWR - the Ibis Budget Hotel in Lymm and the Ibis Budget Hotel in Knutsford, Cheshire.
The investors made full payments amounting to £1.64 million to the British developers, Hotel Options (Lymm) and Hotel Options (Knutsford).
A unit in the Lymm project was sold for £94,500, while one in the Knutsford development was sold for £82,500. When the developers entered into administration in 2015, investors did not receive the amounts promised as investment returns.
DWR's agents had told investors that they would obtain annual returns ranging from 8 per cent to 12 per cent for the first three years following their purchase.
They would then get a capital uplift on the purchase price ranging from 9 per cent to 20 per cent, with a guarantee by the developers to buy the property back at the end of the three years.
The CEA said the investors received returns for periods ranging from one month to six months before the payments ceased.
They have still not been paid the remaining guaranteed annual monthly returns and the capital uplift on the purchase price as promised.
DWR conducted seminars in Singapore in 2014 to market the two hotels.
To entice members of the public, DWR had made false representations in its advertisement, such as inviting them to "meet the developer" and other claims, the CEA said. Yet, DWR knew these developers would not be present.
Four of the six sets of investors had attended the seminars. The CEA warned that consumers should exercise due diligence before entering into any agreement to buy property abroad and not rely entirely on the advice from representatives of the foreign developer.
Adapted from: The Straits Times, 7 December 2017