The Macao Association of Building Contractors and Developers (MABCD) yesterday urged the Legislative Assembly (AL) to consider in more depth the revision of the rental bill before sending it to the plenary session of the AL for voting.
“I fully endorse the idea of trying to bring stability to the rental market,” said the President of MABCD, Paul Tse See Fan. “However, I must point out certain countries that have practiced rent control have run into some severe problems.”
The article of the rental bill that suggests the allowance of control by the government over the rental price poses the most concern to the association.
Mak Tong Cheng, director of MABCD, argued that the coefficients that would be used to adjust the rental price have no correlation to actual market situations, citing from the data of the past decade that coefficients such as consumer price index and income medium index continued to increase despite the rental price dropping substantially due to the adjustment of gaming revenue starting in 2014.
“[From the data] we see that the use of coefficients for adjusting the rental market price would be more suitable for markets with high transparency,” remarked Mak. “According to some international consulting companies’ evaluation of Macau’s real estate market transparency, the rating is very low, it is in fact lower than in Vietnam,” stated the director.
Mak noted that Hong Kong had also implemented a similar mechanism but had confined it to the residential market, furthering that the revised regime would reduce the supply of units for rent as well as the willingness to pay for the maintenance of buildings.
The revision of the rental regime suggested by nine legislators proposes a mechanism which allows the Chief Executive (CE) to cap rental prices for all types of real estate properties, temporarily and as a last-ditch case, basing caps on coefficients.
The legal adviser of the association, Iau Teng Pio, said the restrictions on rent show good intentions but restrictions would also create unfairness for landlords when they subsidise extra improvements on their properties, in particular for commercial usage.
“There are many landlords wholly dependant on the income from rental or for paying the mortgage,” said Iau. “Isn’t it more reasonable for the government to build more public residential buildings for those who can’t afford renting flats? With the government to bear the responsibility?”
Iau added that it is reasonable for the public to bear some responsibility when there are not enough public residential units.
Long queue for notary
Another important issue of the proposed bill is the mandatory notary mechanism.
Iau pointed out that the performance of a notary is convenient for local citizens, but it would be a different scenario for company’s or associations.
“For regulations of companies that do not allow the manager to represent the company to have their contract notarised, then the company will have to hold a meeting for a record and a letter of authorisation,” explained the solicitor.
He noted that more inconveniences will appear, or extra payments will be required, to account for companies outside of Macau.
According to the data provided by MABCD, only 10 per cent of 180,000 tenants were local citizens as at the end of August 2016.
Meanwhile, Iau pointed out that some parking spaces and stores do not have recognised deeds.
Tse explained that parking space rental regulations in the past were vague, with “no ID, no specifying number of your car park”.
“If you go to the public notary and you can’t prove you have a car park, how do you have your contract notarized?” remarked the president of the association.
The executive director of MABCD, Gregory Ku Ka Ho, revealed that individuals might need to wait 28 days for doing the notary at the Public Notary, as they usually only work on weekdays.
Three year contracts
The rental bill revision also suggests the extension of the current minimum two-year contract to three years, with Ku opining that it would result in unfairness for tenants, stating they would have to compensate with contract termiantions with two to three months rent.
He indicated that tenants that are foreign students would have to bear a cost that would be a significant burden for them.
In addition, the rental control would lead to landlords who own commercial properties to preferentially rent out to chain stores rather than to local SMEs (small and medium sized enterprises), commented Ku.
Supply matters the most
In response to press enquiries about whether there is a suitable rental control measure for the city, Tse said any rental control depends a lot on the supply on the market.
“If you don’t have enough supply and rental control is still being imposed, then […] the supply would be reduced if the price is being controlled,” said Tse. “If there is enough supply the price would not increase unreasonably.”
Iau also noted that the implementation of rental control depends on the structure of the region’s market.
Given that legislator Tommy Lau Veng Seng is the chairman of MABCD as well as members of the three standing committees at the Legislative Assembly, Tse noted that a research report was being submitted to the AL in 2016, adding that MABCD had also exchanged ideas with the legislative body on different unofficial occasions.
“[All parties] should voice their concern within these two weeks to allow for adjustments to be made by the nine legislators,” said Tse.