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Dennis Wee Realty hit with S$66,000 fine, 12-month ban for not warning of risks in overseas property purchases
DENNIS Wee Realty (DWR) has been fined a record S$66,000 by the Council for Estate Agencies' (CEA) disciplinary committee for not highlighting to investors the risks involved in buying overseas properties.
DWR was also banned from transacting or marketing properties abroad for 12 months with effect from Nov 24, 2017.
Its fine is the largest penalty meted out thus far to a property agency for failing to abide by regulations on the sale or marketing of properties abroad.
In a statement on Wednesday, the CEA said 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".
"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," the CEA said.
In 2014, the investors had purchased 18 units in two hotel developments in the UK through DWR - the Ibis Budget Hotel located in Lymm and the Ibis Budget Hotel in Knutsford, Cheshire. A unit in the Lymm Project was sold for £94,500, while a unit in the Knutsford Project was sold for £82,500.
Subsequently, they made full payments amounting £1.64 million (S$3.37 million) to the UK developers - Hotel Options (Lymm) and Hotel Options (Knutsford).
When the developers entered into administration in 2015, investors did not receive the amounts they were promised as investment returns.
DWR's agents had previously told investors that they would obtain annual returns ranging from 8 to 12 per cent for the first three years following their purchase. After which, they would receive a capital uplift on the purchase price ranging from 9 to 20 per cent, with a guarantee by the developers to buy the property back from the investors at the end of the three years.
According to the CEA, the investors received monthly returns for periods ranging from one month to six months before payment ceased. To date, they have not been paid the remaining guaranteed annual monthly returns and the capital uplift on the purchase price as promised.
Between April to September 2014, DWR conducted seminars in Singapore to market and sell the two hotels. To entice members of the public to its seminar, DWR had made false representations in their advertisement such as "Meet the developer" and other claims, the CEA said. This was despite the fact that DWR knew these developers would not be present. Four of the six sets of investors had attended the seminars.
Given the complexities and risks involved with purchasing foreign properties, the CEA cautioned that consumers should exercise due diligence before entering into any agreement to buy properties abroad and not rely entirely on the advice from representatives of the foreign developer.
The CEA is a statutory board established in 2010 under the Estate Agents Act to regulate and promote the development of a professional and trusted real estate agency industry.