The Executive Yuan will ask the Legislative Yuan to reconsider a recent amendment to the Land Administration Agent Act that could undermine the real estate transaction price registration system, Premier Jiang Yi-huah said at a press conference today. The amendment to Article 51-1 of the act, passed January 3, grants land administration agents a grace period of seven to 15 days to correct property values if the price they registered is found to be inaccurate.
"After lengthy discussions with the Ministry of the Interior (MOI), the Executive Yuan has reached the opinion that this amendment will likely disrupt the price registration system and contravene the government's land justice policies," said Premier Jiang.
"Having reported the matter to President Ma Ying-jeou, the Executive Yuan will, according to the Additional Articles of the Constitution of the Republic of China, ask the Legislative Yuan to reconsider the amendment so that the government's long-standing efforts to foster a sound real estate market would not be derailed." Jiang added that Executive Yuan will issue a formal request to the Legislative Yuan for reconsideration of Article 51-1 as soon as possible.
According to the Executive Yuan, the real estate price registry has helped make housing prices more transparent for the public since its implementation on August 1, 2012—not only preventing speculation by developers but also providing homebuyers with useful and up-to-date information. The grace period provided by this recent amendment, however, will create a loophole where real estate brokers or land administration agents could intentionally register false data to drive up urban property values.
In accordance with Sub-paragraph 2, Paragraph 2 of Additional Article 3 of the Constitution, "Should the Executive Yuan deem a statutory, budgetary, or treaty bill passed by the Legislative Yuan difficult to execute, the Executive Yuan may, with the approval of the President of the Republic and within 10 days of the bill's submission to the Executive Yuan, request the Legislative Yuan to reconsider the bill." Having received the amendment's official documents on January 16, the Executive Yuan must formally submit its request for reconsideration by January 25.
The Legislative Yuan originally amended the Land Administration Agent Act, the Real Estate Broking Management Act, and the Equalization of Land Rights Act on December 13, 2011 to mandate the registration of real estate transactions by land administration agents, real estate brokers or property rights holders. Since land administration agents have the most expertise, and to avoid multiple registrations of the same case, it was decided that the responsibility for reporting should fall first on land administration agents, followed by real estate brokers.
Further, if a transaction is found to be inaccurately reported, the land administration agent or real estate broker will be fined immediately, while the property rights holder—often the general public—who tends to have less familiarity with such legal procedures, is given a grace period to make the correction. Subjecting land administration agents to immediate fines is not unreasonable in view of their professional experience, Executive Yuan officials said.
According to the MOI, from the launch of the registration system on August 1, 2012 through January 16, 2014, a total of 715,480 cases had been registered with 111 cases leading to fines—104 due to late reporting and only seven due to inaccurate information. These seven instances, representing one per 100,000 cases, indicate that most land administration agents are in compliance with only very few violating the law, and that the original system is indeed effective and appropriate.
In addition, the MOI began a text messaging service on July 1, 2013 to agents with approaching deadlines to register their cases. This service in essence serves as a grace period by giving them an additional opportunity to comply.
However, since these agents register over 90 percent of the transactions, this month's amendment to grant them a legally specified period to correct errors could have a number of negative impacts:
1.Dishonest parties may take advantage of the amendment to initially register a false property value but correct it as soon as the local government finds the valuation to be untrue. Opportunities to spread incorrect information would greatly increase, and public confidence in the entire registration system would be threatened. Moreover, about 500,000 property sales are conducted in Taiwan every year, and the government manpower available for investigation of false registrations is limited as auditing is a time-consuming process.
2.If a fine for late registration is no longer issued immediately, it is foreseeable that the number of late registrations would increase significantly. Late registrations delay announcements of property valuations, hampering the system's ability to provide information in real time, which is disadvantageous for both buyers and sellers.
3.Property in some urban areas tends to be high-priced and traded in great quantity. In Taipei and New Taipei City, for example, there are over 100,000 transactions in a typical year; if the information for just 2 percent were false, that would translate to over 2,000 fraudulent reports per year. Dishonest parties may use the opportunities provided by the amendment to suddenly and intentionally drive the housing market up, manipulating prices by supplying phony data.
Following deliberation with the MOI, the Executive Yuan has responded to concerns expressed by brokers and agents in recent days as follows:
1.In response to the claim that penalty provisions for land administration agents and property rights holders are unequal, officials said ordinary citizens should be given a grace period because they are less familiar with land administration regulations, but land administration agents have expertise in relevant laws and practices and should be required by law to execute their responsibilities with honesty and integrity. Hence, the penalties for average citizens and for agents cannot be compared, they said.
2.As for concerns that punishing agents directly without a grace period is too harsh, the MOI said this is in line with most ROC codes regulating specialized professions. In laws such as the Real Estate Appraiser Act, the Architects Act, the Social Worker Act, the Certified Public Accountant Act, the Certified Public Bookkeepers Act, the Real Estate Brokering Management Act, the Attorney Regulation Act and the Physicians Act, the prevailing principle is to levy fines immediately, therefore the original land administration agent provision is not at all inappropriate.
3.Some businesses claim that reverting to the original provision will unfairly brand land administration agents as being dishonest, but of the 715,480 cases filed so far, only 111 cases have resulted in fines—104 for filing after the deadline and seven for reporting incorrect data. Clearly, most agents are abiding by the law and have not been penalized or stigmatized for reporting inaccurate information. On the contrary, the latest amendment passed this month is the version that will create more public misgivings about the agents.
Setting up the real estate price registry was no easy task, said the premier, but the system has earned the public's trust as evidenced by its 28 million users currently. If the false information penalty provision is loosened, authorities will not have the manpower to verify every case, and it will only take a handful of dishonest people to discredit the system and undermine the government's efforts to curb speculation.
Skyrocketing housing prices are a chief complaint among Taiwan's residents, Jiang continued, and the government cannot allow price registry to be jeopardized for the convenience of a few underhanded people. He called on brokers and agents to work with the government to make real estate information more transparent and achieve housing justice for all.