Consumer Council’s latest report calls for reforms to better safeguard HK home renovation consumers, 1,205 complaints received between 2017 and 2023

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21st February 2024 – (Hong Kong) Hong Kong lacks robust consumer protections for its massive home renovation market, a new study released Tuesday by the Consumer Council warns. It proposes improved industry governance through standard contracts, trader accreditation, dispute resolution and education to address common pitfalls for property owners undertaking renovations.

With residential demand surging, over 1,200 complaints involving HK$270 million in disputed renovation costs flooded the Consumer Council from 2017-2022. Litigation searchers revealed similar contract and service quality disputes in courts.Yet Hong Kong has no specific renovation regulations, forcing consumers to rely on general consumer laws offering limited recourse once projects go awry. The study aimed to understand pain points across the renovation journey and recommend safeguards fitting local context.

Many of these complaints arose due to poor service quality and delays, with the most extreme case involving a complaint worth 28 million Hong Kong dollars. The Council’s research, released today (21st February), reveals that the majority of the surveyed renovation companies offer quotes in various formats, making it difficult for consumers to compare prices effectively; some even reneged on their initial quotes or failed to honor promotional offers as advertised, potentially breaching the law; and 75% of the companies provided false information to customers, such as the option to easily replace kitchen doors or demanding 80% of project fees upfront. The Council suggests the provision of standardised quotation forms to clarify service details and post-service responsibilities.

Between 2017 and 2023, the Consumer Council received a total of 1,205 complaints with a consistent number of cases annually, of which 510 were regarding service quality, 336 involved delays or late delivery, and 120 were related to pricing disputes. They disclosed that the most exaggerated complaint was recently received, where the project manager and designer were almost “missing in action” during the renovation period, with no follow-up on the project, involving 28 million Hong Kong dollars, and the Council is currently following up on the situation.

In response to the chaotic state of the renovation industry, last year the Consumer Council secretly investigated 59 renovation companies and 14 online matching platforms, discovering that over 60% of these companies did not provide detailed quotations or initial cost estimates, such as not specifying unit prices of materials or the method for calculating project costs, merely noting down a lump sum price. Even when initial estimates were provided by the companies, there was about a 30% discrepancy with the actual quotes given, which the Council believes could be related to the different materials used.

Research combining surveys, focus groups, market visits and expert analysis revealed issues in advertising transparency, quotation detail, legal compliance, workmanship arguments and complaints resolution. Consumers desire stronger formal contracts but often lack full understanding of critical clauses. The study suggests establishing a standard form quotation gathering industry best practices on items like payment terms, work scope, schedules and warranties. This would function as a consumer protection baseline.

Additionally, a government-endorsed voluntary accreditation scheme for contractors could adopt tiered competency criteria on safety, financials and customer service. This aims to help consumers identify reliable renovators amid a fragmented marketplace.

For disputes, promoting mediation first before litigation is recommended as a faster, cheaper alternative. Dedicated mediation mechanisms for home renovation suits require qualified professionals to ensure robustness. Lastly, intensified consumer education through government channels and estate campaigns is needed to increase renovation process literacy and prevent common pitfalls.

The study notes Hong Kong lags behind practices abroad including mandatory licensing, accreditation schemes and free alternative dispute resolution services. For instance, Singapore offers voluntary trader accreditation and mainland Chinese courts strongly encourage mediation.

By improving industry governance, the recommendations aim to balance consumer protection and business viability, moving Hong Kong towards global standards. With citizens investing substantial sums into residential renovations, orderly reforms are overdue to assure project satisfaction, the study argues.

Officials, trade groups and consumer bodies must collaborate on incremental enhancements. But willing enterprises can also adopt recommendations immediately to distinguish themselves.