********************************************************
The public are reminded that it is an offence for a subsidised housing flat owner to unlawfully mortgage, charge, assign or otherwise alienate their subsidised housing flat without paying a premium and that such a transaction will also be void, the spokesman for the Housing Department said today (May 15).
The spokesman pointed out that under Section 27A of the Housing Ordinance, a void alienation under Section 17B is an offence and is liable to a fine of $500,000 and to imprisonment for one year.
The spokesman stressed that the Housing Department had always been committed to cracking down on any abuse of subsidised housing flats.
Recently, an owner of a Home Ownership Scheme (HOS) flat was found to have breached the Housing Ordinance by charging his flat to a finance company. The owner and the finance company were both prosecuted. They were fined $8,000 and $12,000 respectively after being convicted in the Eastern Magistrates' Court.
The finance company subsequently lodged an appeal with the Court of First Instance of the High Court. In the judgment delivered on May 12, the Judge of the Court of First Instance pointed out that the relevant stipulations and restrictions in the Housing Ordinance were aimed at preventing buyers of HOS flats (subsidised housing flats) from entering into unauthorised transactions to profit by taking advantage of the discount of the flat price. The charging of the flat without obtaining the prior approval of the Director of Housing was an act to be deterred. The Court had to consider whether the totality of evidence supported the finding that the participants had the intention to create the charge in question. The loan agreement in this case stipulated that when the HOS owner failed to repay the appellant or when other circumstances arose, the appellant could redeem the HOS flat from the bank of the first mortgage and thus take possession the title deeds of the flat. The Court hence ruled that in the present case, charging the land as security of the loan was the intention of both parties and was the only conclusion drawn from the totality of the evidence. The charge was void as the written consent of the Director of Housing was not obtained. The Court agreed with the view of the magistrate that if the loan agreement contained a clause to charge, the said clause was void by virtue of Section 17B of the Housing Ordinance. The appellant hence contravened Section 27A of the Housing Ordinance. The Court rejected the appeal and maintained the original judgment of the magistrate's court.
"Owners of subsidised housing flats who have not paid the premium must obtain the prior approval of the Director of Housing before applying for a second mortgage. The Director of Housing, when considering the application, will take into consideration the particular circumstances of individual cases and may stipulate various conditions. The flat owner must observe these conditions when applying for a second mortgage," the spokesman said.
Ends/Friday, May 15, 2015
Issued at HKT 17:41
NNNN
