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Following is a question by the Hon Wu Chi-wai and a reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (January 7):
Question:
When releasing the new Long Term Housing Strategy last month, the Transport and Housing Bureau pointed out that the Government had updated the projection of long term housing demand for the next decade and, on this basis, had set a total housing supply target for that period. However, housing will still be in short supply. Some members of the public propose that the Government sell the newly built public rental housing (PRH) units to existing PRH households, so that the PRH units vacated by them may be allocated to PRH applicants and future maintenance expenses of the Hong Kong Housing Authority may be reduced. Some members of the public also propose that the Government relax the restrictions on renting out the Home Ownership Scheme (HOS) units as well as the Tenants Purchase Scheme (TPS) units, so as to increase the supply of private rental residential units and lower their rentals. In this connection, will the Government inform this Council:
(1) of the respective numbers of HOS and TPS units the premium-payment procedures for which were completed, the respective numbers of cases uncovered by the authorities in which HOS and TPS units with unpaid premium were illegally rented out, as well as the total supply of private rental residential units, in each of the past three years;
(2) whether it has plans to change some of the PRH units to be completed within the next five years to be HOS units for sale; if it has such plans, of the details; whether it has plans to offer a greater discount rate for calculation of premium so as to attract eligible Green Form HOS applicants to purchase newly built HOS units, thereby speeding up the turnover of PRH units; and
(3) whether it has plans to relax the restrictions on renting out HOS and TPS units with unpaid premium, by allowing the owners concerned to rent out their units but they have to share the rental income with the Government; if it has such plans, of the details; if not, the reasons for that?
Reply:
President,
The Government announced the Long Term Housing Strategy (LTHS) in December 2014. This is the first long term strategy document on housing since 1998. We have adopted the recommendations of the LTHS Steering Committee in its Report on Public Consultation, and made a major policy shift by adopting a supply-led strategy, with a view to averting the current state of serious supply-demand imbalance in housing.
The new LTHS sets out three major strategies: firstly, to build more public rental housing (PRH) units and to ensure the rational use of PRH resources; secondly, to provide more subsidised sale flats, expand the forms of subsidised home ownership and facilitate the market circulation of existing flats; thirdly, to stabilise the residential property market through steady land supply and implementation of demand management measures, and to promote good sales and tenancy practices for private residential properties. With the major direction and main framework set under the LTHS, subsequent reforms will continue to be rolled out accordingly and will incorporate feasible suggestions from the community in a timely manner.
My reply to the three-part question raised by the Hon Wu Chi-wai is as follows:
(1) The number of Home Ownership Scheme (HOS) and Tenants Purchase Scheme (TPS) units with premium paid in the past three years, i.e. 2012, 2013 and 2014 (as at the third quarter), are at Annex.
As for the number of cases on the alleged illegal letting of units with premium not yet paid between 2012 and 2014, the Hong Kong Housing Authority (HA) received 14 reported cases or complaints about alleged illegal letting of units by HOS or TPS owners with premium not yet paid in 2012 to 2014, seven of which involve HOS units while the other seven are about TPS units. After preliminary investigation, HD considered that two cases, involving one HOS unit and one TPS unit respectively, were prima facie cases and hence initiated prosecution. The two cases were convicted at court in 2013 and 2014 respectively.
On private residential property, the Government does not keep the supply figures of rental units in the private residential market, as it is difficult to determine whether individual units would be put up for letting or for sale in a specific period.
(2) We appreciate that for the lower- to middle-income households, HOS units and other forms of subsidised sale flats are the first step for achieving home ownership. At present, a 60:40 public-private split has been set for the new housing production for the next ten years under the LTHS. However, within public housing, there is no rigid ratio between the number of rental units and subsidised sale flats. The Government will, from time to time, review the proportion of PRH relative to subsidised sale flats in public housing, so as to respond to changing market situations and evolving needs of the community in an effective manner.
We note that during previous discussions, there were views that the Government should provide more forms of subsidised sale flats to meet the needs of different people. There were also views that the Government should explore ways to provide more incentives to encourage home ownership of those PRH tenants whose financial circumstances have improved, so that their PRH units can be released for re-allocation to families on the waiting list for PRH. In the context of reinforcing the housing ladder and promoting social mobility, we will consider how to expand the forms of subsidised home ownership and, where appropriate, introduce supplementary schemes of subsidised sale flats.
In addition to opening up more opportunities for home ownership, the Government will continue to increase the supply of PRH units, so as to achieve the target of maintaining the average waiting time for general applicants for PRH (i.e. family and elderly one-person applicants) to receive their first housing offers at around three years.
According to the established HOS pricing formula, selling prices for HOS flats are determined by applying a discount to the market value to ensure that the flats are affordable to eligible households. Affordability is determined on the basis of the principle that for at least 50 per cent of the flats for sale, eligible White Form (WF) applicants at the HOS income limit can achieve a mortgage-to-income ratio of not more than 40 per cent after they purchased the units. In general, the HA will sell HOS units at 30 per cent discount from the market value. However, the HA will consider offering a higher discount if the above affordability criteria could not be met. At present, PRH tenants who apply for the purchase of new HOS flats with Green Form (GF) status are exempted from meeting the income and asset criteria, which is already a more favourable arrangement as compared to WF applicants. We have no plan to provide them with an additional discount rate for HOS units.
(3) Before the payment of premium, HOS and TPS units are subsidised housing. The subsidy is provided by the Government to assist beneficiaries to improve their living environment and to meet their housing needs. Under this policy principle, subsidised housing with premium not yet paid should only be used for self-occupation.
If those owners no longer need the flats they occupied due to changes in circumstances, they can sell their subsidised sale flats to households with GF status without the payment of premium in the Secondary Market. Moreover, the Hong Kong Mortgage Corporation Limited's Premium Loan Guarantee Scheme facilitates owners to take out a loan on top of the existing mortgage loan through their mortgage banks to pay off the premium. Upon payment of the premium, HOS owners can dispose of the property according to their wishes, including arranging to let out their flats.
As stated in the LTHS, the Government will continue to explore effective means to facilitate better use of HOS and TPS units and to promote their market circulation. We will make reference to feasible proposals and discussions in the community.
Ends/Wednesday, January 7, 2015
Issued at HKT 15:50
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