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Following is a question by the Hon Lee Wing-tat and an oral reply by the Secretary for Transport and Housing, Ms Eva Cheng, JP in the Legislative Council today (December 3):
Question:
It has reported that recently, under the impact of the financial tsunami, quite a number of middle-class people are facing economic difficulties, and the aspiration of the general public for home ownership has declined. Cases of premium payments made by owners of Home Ownership Scheme ("HOS") flats have also decreased significantly, with the number of such cases in October plunging by 38% as compared to the same period last year. In this connection, will the Government inform this Council whether it will:
(a) introduce measures to assist owners of Sandwich Class Housing Scheme ("SCHS") flats in solving their cash flow problems or alleviating their mortgage burden, such as allowing them to refinance, remortgage or change the mortgage of their flats or let out their flats without paying the premium; if it will, of the details;
(b) relax the existing procedure for vetting and approving the applications by HOS flats owners for refinancing without paying the premium, so as to help them to borrow cash to meet their needs; and
(c) explore the relaxation of existing premium arrangements (such as providing concessions to owners of SCHS and HOS flats), so as to encourage them to pay the premium and hence boost the number of those flats put up for sale?
Reply:
President,
Both the Home Ownership Scheme ("HOS") and the Sandwich Class Housing Scheme ("SCHS") are home ownership schemes funded by public money. HOS is managed by the Hong Kong Housing Authority (HA), and SCHS is managed by the Hong Kong Housing Society (HKHS).
The objective of the two schemes is to provide affordable housing for self-occupancy to meet the housing needs of the low to middle income families that cannot afford private housing and are not eligible for other types of subsidised housing. HOS and SCHS flats are sold to eligible persons at reduced market price.
According to the terms of the Government Lease for SCHS flats, owners have to pay the premium to the Government if they wish to sell, let or refinance their flats.
HOS flats owners do not have to pay the premium to the Government if they sell the flats to eligible buyers under the Secondary Market Scheme (i.e. existing public housing tenants). However, if they sell the flats in the open market or let them out, they have to pay the premium to the Government first. For the refinancing of HOS flats, owners are normally required to first pay the premium to the Government. That said, HOS owners in financial hardship may apply to the Housing Department (HD) for approval to obtain refinancing loan from eligible lending institutions without paying the premium to the Government. HD will consider the applications on a case-by-case basis.
The above requirements on premium payment are to ensure that publicly-funded HOS and SCHS flats are properly deployed to address the housing needs of eligible persons.
My reply to the three questions raised by the Hon Lee Wing-tat is as follows:
(a) HKHS has all along been processing applications for change of mortgage which do not involve a larger mortgage amount, e.g. transferring the mortgage loan to another lending institution which offers a lower mortgage rate, and has granted approval to them on a case by case basis.
SCHS flat owners and various LegCo members have been requesting this Bureau to allow owners in financial hardship to apply for refinancing from lending institutions without having to pay the premium to the Government. We are considering the request. We are thinking along the direction of setting up a mechanism for SCHS flat owners with financial needs to apply to HKHS to obtain re-financing from eligible lending institutions without having to pay the premium to the Government. HKHS will consider and approve the applications on a case-by-case basis.
The letting of SCHS flats will deviate from the original objective of the Government in providing subsidy to the SCHS scheme, which is to provide affordable housing at reduced market price for self-occupancy to meet the housing needs of middle income families which cannot afford private housing and are not eligible for other types of subsidized housing. As such, SCHS flat owners who wish to let out their flats should pay back the subsidy to the Government by paying the premium.
(b) HD has established a mechanism for HOS flat owners in financial hardship to seek approval to obtain refinancing loan from lending institutions without having to pay the premium to the Government. HD will consider the applications on a case-by-case basis. Also, HOS flat owners may sell their flats under the Secondary Market Scheme without having to pay the premium to the Government. The above mechanism has been working effectively, and we do not see the need to further relax the mechanism for the time being.
(c) As I have mentioned earlier, the objective of the Government in subsidizing HOS and SCHS is to help owners of first-hand HOS and SCHS flats to purchase the flats concerned at reduced market price to meet their housing needs. Therefore, when HOS or SCHS owners sell their flats in the open market, they should no longer be entitled to enjoy such subsidy and should pay back the subsidy to the Government in full by paying the premium. The premium payment arrangements are premised on the aforementioned principle. Increasing the turnover of HOS and SCHS is not one of our considerations.
Ends/Wednesday, December 3, 2008
Issued at HKT 14:33
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