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LCQ4: Disposal Arrangements for Surplus HOS Flats


Following is a question by the Hon Ho Chun-yan and a reply by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in the Legislative Council today (March 24):


The authorities concerned have ceased selling Home Ownership Scheme ("HOS") flats since 2003, and indicated in October the same year that no unsold and returned HOS flats would be offered for sale as subsidised housing before the end of 2006. They also invited Expression of Interest from the public on the option of converting into hostels two unoccupied HOS blocks which have never been offered for sale. In this connection, will the Government inform this Council:

(a) of the respective overall amounts of maintenance fees, management fees, and other expenses pertaining to the unsold and returned HOS flats since their completion to date, and from now to the end of 2006;

(b) other than selling unsold and returned HOS flats to Green Form applicants in the future, whether the authorities concerned have other specific plans to dispose of these flats; if so, of the details of the plans; if not, the reasons for that; and

(c) of the concrete proposals raised in the Expression of Interest received by the authorities concerned on the conversion of two HOS blocks into hostels; whether they have shelved this disposal option for unoccupied HOS flats; if so, the reasons for that?


Madam President,

My reply to the three-part question is as follows:

(a) In the light of the increasing overlapping between the private property market and the subsidised housing market, the Government and the Housing Authority decided to cease the sale of Home Ownership Scheme (HOS) flats in November 2002 to address the imbalance between demand and supply of residential flats in the market. The Housing Authority has to pay management fees and Government rents for the surplus HOS flats. We also envisage that some costs may be incurred for touching up some of the flats before their re-sale to Green Form applicants. It should be noted that the costs for maintaining the surplus HOS flats differ according to their nature and the manner of their future disposal.

Up to March 2004, the management fees and Government rents incurred by surplus HOS flats were in the region of $120 million. Since no unsold or returned flats in existing HOS courts had been put up for sale during the period, no touching-up costs had been incurred.

From April 2004 to end 2006, it is envisaged that the management fees and Government rents incurred by returned and unsold flats in existing HOS courts will be in the region of $230 million. Moreover, before the new flats in existing HOS courts are put up for sale in future, a one-off cost of about $5 million will be required for touching-up works. Returned flats require more substantial refurbishment due to previous occupation. However, given that refurbishment is necessary for them irrespective of the timing of their re-sale, such cost is not a holding cost for surplus HOS flats. As for the flats in unsold HOS developments, we are considering various options to dispose of them. Practicable options will be implemented expeditiously. Therefore, we have not made any projections of their future holding costs. Detailed breakdown of the cost estimates is at Annex.

(b) We consulted the Legislative Council Panel on Housing in March and November 2003 on proposed disposal arrangements for the surplus HOS flats. Apart from some 11 000 unsold and returned flats in existing HOS courts which would be sold to Green Form applicants in future, three main options have been put forward for disposing of some 12 000 flats in eight unsold HOS developments. Progress to date is outlined in the following paragraphs.

First, some 2,100 HOS flats of Hiu Lam Court in Sau Mau Ping were transferred to public rental housing last year. We will seek the Housing Authority's approval to transfer another 3,000 flats to public rental housing. About half of the surplus HOS flats will ultimately be used as public rental housing.

Second, we plan to use about 4,000 odd HOS flats for re-provisioning aged staff quarters of the disciplined services and the land released could be put to alternative uses. Our discussion on financial and administrative arrangements with the relevant Government departments is underway and now at a final stage.

Third, we have suggested to convert about 700 HOS flats into guesthouse or similar uses. We invited expression of interest in October 2003 to ascertain the feasibility of the proposal. We are examining in greater detail proposals which appear to be practicable.

We will expedite follow-up actions along the directions mentioned above and will continue to explore other disposal options for the remaining flats.

(c) As mentioned above, we invited expression of interest last year on the proposal to convert some HOS flats into guesthouses. The invitation was couched in open terms so as to allow a greater scope for interested parties to put forward innovative and commercially viable proposals. A total of eight proposals were received from organisations of different natures and scales. Proposals put forward included hostels, hotels and guesthouses, as well as bulk purchase of surplus HOS flats for use as "time-share" holiday homes. We have examined the feasibility of the proposals with a view to devising a unified implementation arrangement. In reply to an oral question raised by Hon Abraham Shek in December 2003, I advised the Council that the Housing Authority had sought in-house and external legal advice on the feasibility of the proposal to transfer HOS flats into guesthouses. While the advice indicated that the proposal is generally feasible, it is necessary to examine the detailed arrangements carefully from a legal perspective to ensure that the proposal is legally sound in all aspects.

We note that some sectors of the community take the view that use of surplus HOS flats as "time-share" holiday homes for Mainland visitors is conducive to tourism and economic development of Hong Kong. However, there has been concern about possible impact of the proposal on the hotel industry. We sounded out the industry recently and it seems that its previous concerns have somewhat lessened. We will therefore explore the disposal arrangement for remaining 3,000 odd surplus HOS flats along this direction. Given that "time-sharing" is a relatively new concept in Hong Kong and in the absence of legislation to define or regulate "time-sharing" operations, we need to examine the proposal from both practical and legal perspectives with relevant policy bureaux and Government departments. Issues to be considered include lease control, regulation of "time-sharing" operations as well as impact on the hotel industry. I wish to emphasise that if it is decided to implement this proposal, the flats will be sold by way of open tender to ensure that they are disposed of at reasonable market price. We will also consult the Housing Authority on the detailed proposal.

Ends/Wednesday, March 24, 2004


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