SINGAPORE — Property agency Dennis Wee Realty (DWR), which held exclusive rights to sell United Kingdom (UK) properties in Singapore, has been fined S$66,000, and banned from transacting or marketing foreign properties for a year from Nov 24 for not informing investors of the risks involved in purchasing such developments.

This is the largest penalty meted out by regulators here to a property agency for failing to abide by regulations related to estate agency work involving foreign properties.

On Wednesday (Dec 6), the Council of Estate Agencies (CEA) said DWR was convicted of six charges of “failing to provide a written advisory message to six sets of investors to draw their attention to the risks involved” when they paid more than S$3 million to developers in 2014 for two Ibis budget hotel developments located in the UK at Lymm and Knutsford.

“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,” said the CEA, the government agency that regulates the real estate agency industry here, in a statement.

“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.”

Instead, DWR only informed investors of a number of “guaranteed” investor returns. But when the UK developer, Hotel Options, went into administration in early 2015, “payment ceased”, and “investors did not receive the amounts that were promised to them as investment returns”, said the CEA.

The six sets of investors only received monthly returns for periods ranging from one to six months, the CEA added.

In sentencing DWR, CEA’s disciplinary committee took 12 other charges into account. Three charges involved similar lapses with three other sets of investors when facilitating the purchase of three units in the Lymm project.

The nine remaining charges were for making false representations such as “Meet the developer” in their advertisements in the Straits Times when publicising seminars to market and sell the Ibis projects. “This was despite the fact that DWR had known that the developers would not be attending the seminars,” said the CEA.

In those seminars held over four weekends between May and June 2014, DWR’s agents told investors that they would be receiving annual returns ranging from eight to 12 per cent for the first three years.

Investors were also promised a capital uplift on the purchase price ranging from nine to 20 per cent with a guarantee by the developers to buy the property back from the investors at the end of three years.

With those promises, investors – four sets from seminars and two sets from DWR agents’ own contacts – bought a total of 18 hotel units across the two projects “on the same day or shortly after”, said the CEA.

Five of the six sets of investors had purchased multiple units, with one investor buying as many as six units. A unit in the Lymm project was sold for £94,500 (approximately S$194,320) while a unit in the Knutsford project was sold for £82,500 (approximately S$169,645).

This is the second case in which an agency has been prosecuted for failing to provide a written advisory message to investors to draw their attention to the risks involved in purchasing foreign properties.

In an advisory on Wednesday, the CEA said consumers should also “exercise due diligence” before entering into any agreement to buy foreign properties and not “rely solely on the advice from representatives of the foreign developer”.

The CEA added: “Buying a foreign property is a big investment. Given the complexities and risks involved, consumers should find out and understand pertinent information such as the foreign country’s rules and restrictions on property purchases and ownership, whether the property has obtained approvals from the authorities, taxes payable, pricing and terms and conditions of the purchase, the foreign property market condition, currency exchange risks, etc.”