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The following is issued on behalf of the Hong Kong Housing Authority:
Following is an English translation of the speech by the Director of Housing, Mr Stanley Ying, at the Hong Kong Housing Authority regular open meeting today (July 9):
Chairman, Members and colleagues,
I would like to thank Members for sharing their views at the Annual Special Open Meeting held earlier, which have given us much food for thought as we reflect on our previous work and map out our way forward.
As some Members mentioned the Government's work in housing, I would like to give you an outline of what the Government has done in this area before discussing the work of the Hong Kong Housing Authority (HA) and the Housing Department (HD).
The Government
Over the past year, one of the Government's most major endeavours in housing was the formulation of the Long Term Housing Strategy (LTHS). It was 16 years ago, back in 1998, when the Government last drew up a long-term strategy on housing. The formulation of the LTHS highlights the Government's determination to solve the housing problem and reflects the consensus that there are no quick fixes. It will take time and persistent efforts for initiatives to bear fruit. To start with, in relation to principles, there are two main points:
- Supply-led; and
- Flexibility.
The supply-led principle means we would plan ahead and make available land for housing development on a continuous basis. Flexibility means we would update the projection of long-term housing demand and work out a rolling 10-year housing supply target every year so that we can reflect actual changes in society, the economy and the demographic outlook in a timely manner.
The concrete strategy as outlined in the LTHS boils down to the following:
- To project demand over the next 10 years and work out supply targets for the period every year;
- On the public rental housing (PRH) front, to expedite and increase PRH production and better utilise PRH resources;
- On subsidised sale flats, to expedite and increase their production while reinforcing the housing ladder and expanding the forms of subsidised home ownership; and
- With regard to private housing, to stabilise the supply of land and manage demand as and when necessary.
What has the Government done in these areas over the past year?
Demand-side Management Measures
On private housing, the Government has introduced three types of stamp duties: Special Stamp Duty (SSD), Buyer's Stamp Duty (BSD) and doubled ad valorem stamp duty (DSD) to better manage several types of private housing demand, namely, short-term resale, non-local demand and the acquisition of a second property. Earlier this year, we reported to the Legislative Council (LegCo) on the effects of the SSD and the BSD. On SSD, speculative activities in the form of short-term resale dwindled from a monthly average of 2 661 transactions or (20 per cent of the total transaction volume) before the introduction of the SSD to a record low of 49 per month in the second quarter of 2015, representing 0.8 per cent of the total transaction volume. As for the BSD, purchases by non-local individuals and non-local companies have shrunk from 365 cases (or 4.5 per cent) on average per month before the imposition of the duty to 76 cases per month in the second quarter of 2015, representing 1.3 per cent of the total transaction volume.
Regarding the DSD, the Financial Services and the Treasury Bureau (FSTB), which is responsible for that, undertook to report to LegCo the review outcome one year after the legislation came into operation. The FSTB is following up on this.
Resources Required
Manpower, financial and land resources are vital to implementation of the LTHS. As far as manpower resources are concerned, the HD has obtained approval in the 2015-16 Budget of the Government to create 154 civil service posts. Coupled with the posts created in the previous three financial years, the past four years have seen an increase of 616 posts in the department's establishment to cope with the additional workload arising from a higher production target of public housing. We will see to it that these new posts and contract staff employed under the HA's policy will be effectively deployed. Continued effort will also be made to seek additional staff for the work coming up.
As for the financial provision, the Government also provides funding to implement works related to public housing. In the past five legislative sessions, the Government funded nine such projects, involving a total provision of about $1.8 billion. On top of that, we have consulted the LegCo Panel on Housing on another two projects and they are pending the approval of LegCo. Moreover, in the 2015-16 Budget, the Government announced that $27.5 billion had been reserved as the initial injection to set up the Housing Reserve, and further injections would be considered at an appropriate juncture to meet the future public housing supply target.
Regarding land supply, to meet the total housing supply target of 480 000 public and private flats for the coming 10 years, the Planning Department has conducted a series of land use reviews over the whole territory on plots of government land which are vacant, leased out under short-term tenancies, or used for different short-term, "Government, Institution or Community" and other government purposes, as well as Green Belt sites. Through the reviews, the Government has identified a total of about 150 potential housing sites (including around 70 Green Belt sites). Subject to timely amendments to respective statutory plans for change of land use and an increase in the development density, many of these sites may be made available for housing development in the five-year period from 2014-15 to 2018-19 for building over 210 000 flats, among which over 70 per cent are public housing flats.
Projection of Demand
Finally, the important task that the Government is doing is that we are collecting data in accordance with the methodology specified in the LTHS to project the 10-year demand from 2016-17 onwards for the formulation of the supply target of public and private housing for the same period. The new 10-year demand projection and 10-year supply target are very important to the Government as well as the HA. It is also of concern to the public.
Public Housing Production
For the public housing portion of the 10-year supply target, the HA is inevitably the primary production force. However, the Hong Kong Housing Society (HKHS) is also an indispensable partner of the Government. The Government has been providing the HKHS with suitable sites for public housing development. We have identified a new batch of sites and are currently discussing with the HKHS for them to take over for public housing development.
With the concerted efforts of the HA and the HKHS, public housing production is increasing gradually. At the Building Committee (BC) meeting held in June, Members discussed the HA's projected housing production for the five-year period starting from 2015-16, as well as the housing production by the HKHS during the same period. The relevant paper has been uploaded to our website for reference. I have selected these figures and put them down on the PowerPoint slide.
From this set of data, we may take note of the following points:
(1) There is an increase in the five-year public housing production from 2015-16 onwards when compared with the previous three five-year periods;
(2) The total PRH production is only slightly higher than the previous annual average production of 15 000 flats. However, the availability of subsidised sale flats can also indirectly help the PRH applicants. In the past, about 55 per cent of Home Ownership Scheme (HOS) flats were purchased by Green Form (GF) buyers. Using this for projection, with the supply of 19 200 subsidised sale flats in the five-year period from 2015-16, we can recover thousands of PRH flats for allocation to PRH applicants;
(3) There are year-to-year fluctuations in public housing production. For example, only 9 900 new PRH flats were produced in 2014-15, but there will be 23 300 flats in 2015-16. There will be similar fluctuations in production in the next few years; and
(4) Although there is an increase in the total production in the first five years, it still falls short of the 10-year public housing supply target of 290 000 flats.
The last point attests to what we have been saying, that is, there is little room for significant increase in housing production in the initial period of the coming 10 years. We hope that we can make it up in the last few years. At what time in the latter part of the period can we see a drastic increase in production hinges on a number of objective factors, including whether we can secure sufficient land, what kind of land we can secure and the time we need to transform each site into housing.
We face a lot of challenges on these fronts. With our efforts and the support of stakeholders, some of these projects, such as the five HOS developments put up for sale last year and the Eastern Harbour Crossing Site Phase 7, can be completed within a relatively short period of time. They are spade-ready sites and do not require rezoning. The period from inception to completion can be shortened to about five years. However, the majority of the sites are not spade-ready (i.e. the sites are not properly zoned, or require land resumption, clearance, reprovisioning of existing facilities, site formation or the provision of additional infrastructure). For sites that require rezoning and the submission of planning applications, it takes even longer to complete the town planning process. Of the 80 sites on which we have consulted District Councils in the past five years, about 90 per cent involve rezoning and planning applications. Some projects indeed are very complex. Take the Queen's Hill development as example. Even though it is a government site, rezoning as well as clearance and site formation and provision of additional infrastructure are required. We did our best to expedite the process and successfully shortened the period from inception to completion to about seven years. We have also encountered extraordinary challenges in some other projects. For example, 800 PRH flats were originally scheduled to be completed at the Tai Wo Hau Road Phases 1 and 2 sites in 2019-20. However, as the relevant Outline Zoning Plan is subject to a judicial review case, the Tender Committee had to cancel the tender, and we are still not able to estimate when the project can be completed. This is one of the reasons why we cannot further increase the PRH production in 2019-20.
I would like to take the opportunity to mention an earlier newspaper report which claims that it learned from an internal government document that we have only secured adequate land to build 254 000 flats instead of the 10-year public housing supply target of 290 000 flats. In fact, all along we have been informing the public on the progress of site identification and public housing construction in a transparent and timely manner. When we promulgated the LTHS last December, we also issued a document to give an update on the work progress as at last December. It is stated explicitly in this public document that assuming that all sites identified can be delivered on time for housing construction, 254 000 flats could be built on the land secured at that time. The figure of 254 000 flats is therefore a piece of public information, and one that was already published last December. We will continue to promulgate the progress of site identification and public housing construction in a transparent and timely manner.
Having talked about the work of the Government, I would like to turn to the HA's work on PRH, subsidised housing and commercial properties.
Public Rental Housing
Regarding PRH, there are still common confusions about some policies and concepts among some members of the community. For example, what does it mean by "waiting time at around three years on average"? I would like to reiterate that the HA has all along been adopting the same methodology in calculating and in presenting the average waiting time (AWT). The term "AWT" refers to the average of the waiting time of those general applicants who were housed to PRH over the past 12 months. Waiting time counts from the time of registration until the first housing offer, excluding any frozen period during the period. The definition of waiting time is based on "the first housing offer", but not "being housed", because applicants are entitled to three housing offers under the HA's policy, and depending on whether the applicant accepts the first, the second or the third offer, it may result in three different calculations of waiting time. Therefore, it is our practice to count the waiting time up to the first housing offer, but not the time when the applicant is "housed".
The above more complete definitions have been incorporated into our webpage and PRH application forms. However, there are still misunderstandings among some members of the public. First of all, as evident in the above definition, it is not the HA's target to "house applicants in three years' time". If I am asked to give a condensed form of expression, I would say "to allocate flats in three years". Secondly, the target of "to allocate flats in three years on average" is applicable only to general applicants, namely family and elderly one-person applicants, but not applicants under the Quota and Points System (QPS), i.e. non-elderly one-person applicants. Prior to 2005, we did have a Waiting List whereby all categories of applicants queued up for their turn. In 2005, the HA introduced the QPS with a view to according priority to the housing needs of family and elderly applicants. Since then, non-elderly one-person applicants have to apply for PRH under the QPS, and the target of "to allocate flats in three years" is not applicable to the QPS. Since the mechanisms applicable to general applicants and QPS applicants are distinctly different, I usually avoid using the old concept of Waiting List to cover both categories of applications, or adding them up to a total number, in order not to mislead the public.
Another common misunderstanding is that the PRH vacancy rate is very high. Detailed discussion on the issue can be found in the Director of Audit's Report No. 61 and the subsequent Report of the Public Accounts Committee of LegCo. When the LTHS was promulgated last year, we released a progress report as at 2014, stating that the vacancy rate then was 0.52 per cent. The latest figure is 0.3 per cent. We understand that given the shortage in PRH, it is our responsibility to reduce the vacancy rate as far as possible. We will continue to strive to reduce the vacancy rate and announce the vacancy position.
Some think that we do not optimise the use of PRH, because they do not agree with the HA's policies, which include:
- "Well-off Tenants Policies" and Change of Tenants Policy;
- Quota and Points System; and
- Under-occupation Policy.
With regard to the "Well-off Tenants Policies", there have always been divergent views in the community. Some advocate tightening of the policies while some think that the policies should be relaxed or even scrapped. In October last year, we presented an analysis of the various views and options to the Subsidised Housing Committee (SHC). At the meeting, Members reflected very different or even opposite opinions. The SHC did not draw a conclusion at the meeting and resolved to discuss it again on a later date. Last month, Members similarly expressed divergent views in their speeches. We are considering the materials to be prepared and timing for Members to discuss the issue again.
A relevant policy issue is the Change of Tenants Policy. Some people think that the Change of Tenants Policy is not optimising PRH resources, but what they are really targeting is indeed the "Well-off Tenants Policies". We do not seem to have objection to allow the surviving husband or wife to become the principal tenant upon the death of the principal tenant. However, opinions are diverse if other family members are going to be the principal tenant. Under the prevailing policy, in considering an applicant other than the spouse to become the principal tenant, we will adopt the income and asset limits of the "Well-off Tenants Policies" to determine whether the new principal tenant has to pay the normal rent, 1.5 times the rent or double rent, or to terminate the tenancy. Some consider that the criteria under the "Well-off Tenants Policies" should not be applied under such circumstances. Instead, the income and asset limits applicable for PRH application should be adopted to determine whether family members should be allowed to retain the tenancy upon the death of the principal tenant. At the SHC meeting in March this year, Members reflected different views of the community, but the existing policy was maintained in the end. As mentioned earlier, we plan to invite Members to discuss the issues again.
SHC Members have also discussed the QPS and the Under-occupation Policy in the past year. At the meeting, members noted the difference in opinions in the community and resolved to fine-tune the policies. We are implementing these new measures and will keep in view changes in future development and public opinions.
It is our responsibility to implement established policies and to detect tenancy abuses that are not in line with the policies. However, we have to face challenges every day in the course of implementation, including constraints on resources, and whether tenants are understanding and supportive of our work. We ourselves also have to review from time to time how best to organise and deploy staff, and whether new technology and new methods can be employed. In addition, the department is conducting an internal review on how to strengthen our efforts in combating tenancy abuses that are not in line with the policies.
Another issue concerning resource optimisation is whether the land has been fully utilised to provide non-domestic facilities. Whenever a public housing project is discussed at the Building Committee, Members often enquire whether non-domestic facilities for commercial, welfare or recreational purposes can be incorporated. The Strategic Planning Committee (SPC) has also discussed this issue. The gist of the guidelines set by the SPC can be summarised as two points:
(a) The prime concern is optimisation of the site for residential development; and
(b) What follows is optimisation of the site for non-domestic facilities having regard to whether that will reduce the number of flats, result in longer time for the podium construction and funding approval from LegCo, or result in major financial commitment, and whether such facilities are financially viable.
We will fully utilise every site in accordance with the guidelines and present the situation of non-domestic facilities to the BC.
Another issue under resources optimisation is redevelopment. As stated in the LTHS, while redevelopment of public housing estates may increase PRH supply in the long term, it will reduce the stock of PRH flats in the short term. It is undesirable to carry out any massive redevelopment programme which will result in freezing a large number of PRH flats that may otherwise be allocated to households in need, given the current keen demand for PRH. The HA will continue to consider redevelopment on an estate-by-estate basis in accordance with its policies and criteria.
For housing estates that have not been included in the redevelopment programme, we will not ignore them. Different programmes are in place to maintain and refurbish both the internal and external environment of the flats as well as estate facilities. The Responsive In-flat Maintenance Service has been launched in 212 public housing estates, providing comprehensive maintenance services at the request of individual tenants, which in turn helps rectify building defects more promptly and at an early stage. The average annual expenditure incurred in this programme is about $320 million.
We have also introduced the Total Maintenance Scheme (TMS) for housing estates aged 10 years or above. As at March 2015, the second cycle of the TMS had been rolled out in 120 housing estates, among which inspection and repair works in 96 housing estates have been completed. The average annual expenditure of the TMS is about $180 million.
We also replace old lifts and install additional lifts in housing estates. So far, we have replaced over 800 aged lifts and are planning to carry out modernisation works for over 500 lifts in 25 housing estates at a total project cost of about $830 million. We will install lifts in phases for common areas without the provision of lift service provided that appropriate conditions are met and it is technically and financially feasible. Addition of the first batch of 70 lifts has been completed at a total project cost of about $740 million. Construction of the second batch of lifts has commenced and is expected to complete by 2017 with the installation of 13 lifts in total at a total project cost of $290 million. The HA has decided to turn the future Lift Addition Programme (LAP) from a multi-year rolling programme to an annual ongoing programme. The recent LAP 2015-16 has just been launched to install two new lifts in two existing public housing estates at an estimated project cost of $54 million.
Apart from in-flat maintenance, total maintenance and lifts, we have also put in place the Estate Improvement Programme for housing estates meeting the requirements, under which estate amenities and other facilities will be updated. The improvement works in eight housing estates have completed, while those for another five housing estates are in progress.
Another issue is how to render assistance to ethnic minorities in PRH applications. This issue has all along been our concern. We have provided in the website of the HD basic information on PRH applications in six ethnic minority languages commonly used in Hong Kong. In order to assist ethnic minorities in applying for PRH, the Government provides funding for non-profit-making organisations to provide translation services. An information note written in common ethnic minority languages is attached to notification letters sent to ethnic minority applicants informing them of the availability of translation/interpretation services provided by the non-profit-making organisations. Such a message has also been uploaded to the website of the HD.
Each PRH applicant has to attend a detailed eligibility vetting interview arranged by the HD. Upon prior request made by applicants, translation services by professional interpreters during interviews will be provided. If no such request has been made prior to the interviews and if such a need arises during the interviews, we will approach the relevant non-profit-making organisation to see if it can provide simultaneous interpretation service via webcam.
Subsidised Sale Flats
The 2011-12 Policy Address announced the resumption of the HOS. The first batch of new HOS flats was put up for pre-sale in 2014, and the flats are expected to be completed in 2017. The 2015 Policy Address mentioned that the HA would put up approximately 2 700 and 2 000 HOS flats for pre-sale in 2015-16 and 2016-17 respectively, while the HKHS would offer 1 600 flats for pre-sale in 2016-17. We are working hard towards this target.
The pre-sale of the new HOS flats launched at the end of 2014 is the first large-scale sale of its kind in more than a decade. While we have generally followed our past practice, we also paid attention to any changes required. For example, whether the announcement after ballot can better explain subsequent procedures, whether physical show flats are still needed in addition to the provision of virtual show flats using the latest technology, and whether sales brochures should be distributed at the launch of the sale or before the selection of flats. We hope to explore ways to streamline the procedures that applicants have to go through, to reduce our manpower requirement and to expedite the entire sale process.
Three benefits can be brought about by subsidised sale flats. First, the HOS can help address the aspirations of those who hope to solve their housing needs through home ownership. Secondly, some of the HOS flat buyers may also be interested in private housing. Their purchase of HOS flats can result in a reduction in the demand for private housing. Thirdly, for HOS flat buyers who are GF applicants, their PRH flats, after refurbishment, can be re-allocated to PRH applicants. We will continue to spare no effort to implement the HOS.
The above-mentioned benefits brought about by the HOS can also be reaped by another kind of subsidised sale flat scheme, i.e. the Green Form Subsidised Home Ownership Pilot Scheme (GSH). Similar to the HOS, the GSH can assist GF applicants who wish to meet their housing needs through home ownership. Their purchase of GSH flats may result in a reduction in the demand for private housing, and their PRH flats can be re-allocated to PRH applicants. Some critics object to the GSH on the grounds that the sites used for the GSH are no longer available for PRH development, or that flat allocation for applicants will be slowed down as it takes several months to allocate the recovered flats. If we object to the GSH became of these facts, should we also object to the HOS on the same grounds? This does not seem to be the consensus of the community. The GSH does have a trade-off but it also has benefits: it offers GF applicants an additional way to achieve home ownership, reinforces the housing ladder and expedites the turnover of PRH flats. The SHC has decided to implement a pilot scheme, and we will invite it to review the pilot scheme in due course.
Commercial Properties
As compared to residential properties, the use and management of the HA's non-residential properties attract relatively less attention. The Commercial Properties Committee has put in a lot of efforts over the past few years to enable our commercial properties to better meet the needs of our domestic and commercial tenants.
We have conducted analysis for our shopping centres and identified target shopping malls for asset enhancement through major improvement works and re-designation of trade mix. They are undergoing different stages of improvement or study in accordance with their relative priorities. Major improvement works for retail facilities in Kwai Shing West Estate and On Kay Court are under way. Hoi Lai and Tin Yan Shopping Centres have been identified for further study on how to improve. We have also completed the works on the retail and car parking facilities in Ping Shek Estate, which include the refurbishment of a Chinese restaurant, addition of retail shops, addition of community facilities, improvement to market stalls, new escalator and lift installation and so on. These improvement items have provided more retail and dining choices for local residents and helped optimise the business potential of retail space for the tenants and capture the locational advantages of the estate.
To date, improvements to the commercial assets has attained certain results. The vacancy rate of retail premises dropped from 4.9 per cent in March 2011 to 1.7 per cent in March 2015. We will continue to optimise the use of our retail facilities and keep the asset enhancement programme under review.
Also, we have been improving the efficiency in the utilisation of car park facilities. There are 131 car parks under the HA, providing a total of about 28 200 parking spaces, amongst which about 25 300 are monthly parking spaces and 2 900 are hourly parking spaces. The average occupancy rate for the monthly parking spaces has increased from 74 per cent in 2010 to more than 90 per cent lately.
There are six factory buildings under the HA with a total area reaching 200 000 square metres. The occupancy rate has consistently been over 90 per cent.
Lastly, I would like to talk about the issue of manpower. As I pointed out last year, the manpower issue in the department is of immediate concern to my colleagues and me. I met over 30 unions when I assumed office last year. Colleagues raised the manpower issue almost every time. I have recently started another round of conversations with the unions. The manpower issue is still their main concern.
With the increase in housing production, we need to ensure that there is adequate manpower in areas such as the construction and management of housing, and the provision of central support so that we can excel in both quality and quantity. We have therefore adopted a two-pronged approach. On the one hand, we increase our manpower. As I said before, there has been an increase in our manpower over the past three years. However, since our workload will increase further, we will continue to monitor the changes in demand for manpower, and apply for additional civil service posts as necessary and recruit more supporting staff. On the other hand, we are reviewing our work processes to see if we can better utilise our human resources. The work includes reviewing the priority and importance of the tasks in order to decide which tasks we can do less or even cease to do. We will also review the workflow to see if it is possible to cut down work processes that add little value or are of negative value. We will also reassign the duties to reduce the mismatch of expertise and jobs. During our discussion of existing or new tasks, I hope Members will support us in streamlining the work processes so that we can deploy resources based on the priority of the tasks in hand.
Thank you.
Ends/Thursday, July 9, 2015
Issued at HKT 18:58
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