Have you heard about lot drawing when buying off-the-plan properties in Hong Kong? Most standard units from new projects are sold through this scheme, while more luxurious units are usually sold by tender, due to limited supply and a smaller audience. Other ways of selling new units include internal subscription and off-market tendering.

Oversubscription of new units are commonly seen in the first-hand market. So even you are interested to buy, you are not guaranteed to get it.

But still, you need to get familiar with the procedure. Let Spacious guide you through the new property subscription process from registering an interest to the lot drawing stage of unit selection.

Jump to: Preparation Stage | Subscription Stage | Lot Drawing Stage | FAQ

The Preparation Stage

Developers must comply with the “First-hand Residential Property Sales Ordinance” when selling new properties. The law is to protect buyers and ensure that they receive accurate and comprehensive information before they decide to buy.

Read the Sales Brochure

Developers must distribute the sales brochure of the property at least 7 days before the date of sale. It includes detailed information such as bird’s-eye view diagrams, payment incentives, units available for sale and floor plans. Buyers can make more informed decisions.

Visit the Show Units

After publishing the price lists, developers will typically announce sales arrangements within a short period, including the time and location for unit subscription and the opening of show units.

The show units include both furnished and unfurnished flats. The latter shows how it actually looks like during the handover of the property. It’s worth inspecting both types of units carefully before registering an interest.

Read the Price Lists

The price list must be published at least 3 days before the project lunch. The list contains the number of units to be sold, prices, different payment methods and incentives. Buyers can calculate their budgets and mark their preferred units by referring to the price lists.

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The Subscription Stage

Registration of Intent

To subscribe to an off-the-plan property, the buyer needs to submit a “Registration of Intent Form” and pay a deposit, usually a HK$100,000 cashier’s order payable to the developer’s designated law firm.

The time and place of registration is usually scheduled around the launch date of show flats, where registration can be done on the spot.

To increase chances of winning the lot-drawing game, some would-be buyers may submit multiple cashier’s orders. For example, just two buyers may submit a maximum total of six cashier’s orders.

Some agents may also advance payment of the cashier’s order on behalf of their clients to speed up deals. However, doing this may violate the “First-hand Residential Property Sales Ordinance,” and the agent may be fined and even be imprisoned.

Nevertheless, the industry often take advantage of legal loopholes when it comes to payment. The would-be buyer may initially transfer money to the agent via credit payment, but the payment will not be transacted yet. The agent will then issue the cashier’s order on their behalf.

The agent only helps convert funds from a credit card to a cashier’s order, which is a legitimate and reasonable practice. The credit payment is only made to the agent when the buyer is granted the rights to select units.

In addition to credit cards, the agent may also convert funds from a cashier’s check to a cashier’s order. The agent will actually cash the check after the client confirms to buy. In other words, if the buyer is not selected, he or she will not have any actual financial outlay.

The Lot Drawing Stage

After the submission of application forms, the developer usually uses the following two ways for unit selection:

• First-come-first-served
• Lot-drawing

Lot drawing is commonly used to determine buyers’ order of selecting units . On the sales launch date, the sales office is typically divided into several areas: registration area; lot-drawing area; waiting area for unit selection; unit selection area; waiting area for contract signing; and contract signing area.

A big sheet of unit consumption table is displayed in the selection area. It shows the remaining available units; units that have contracted ; and units that have been selected but not yet contracted. The deposit paid upon registration will be deducted when signing the provisional sales and purchase agreement.

The selection process will divide buyers into Group A and Group B.

Group A comprises of buyers who will buy multiple units. They are given priority in selecting units. However, to encourage public participation and to boost sentiment of the new development, developers usually limit the number of units that can be purchased by each buyer.

After the unit selection results are announced, buyers can check their own lot numbers and estimate if they stand a chance to purchase their desired units.

Units with better conditions are likely to sell faster, so it is recommended that buyers prepare a backup list in case their preferred units are chosen by others.

If the buyer’s ability is limited and there aren’t many units available within the budget range, they can only hope that the developer will choose and draw their application sooner through their lottery scheme.

Conversely, if the buyer has sufficient budget, they may be able to select high-quality units even if they don’t have earlier draws.

Lot-drawing scheme is generally applied to off-the-plan purchase, and new units are not always possible to move in immediately.

If you are considering buying a property on the secondary market, go to Spacious to view quality listings in various areas.

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