*******************************************

The following is issued on behalf of Hong Kong Housing Authority:

    A spokesman for the Housing Authority today (July 6) reminded owners under the Private Sector Participation Scheme (PSPS), Home Ownership Scheme (HOS) and Tenants Purchase Scheme (TPS) to observe the alienation restrictions as laid down in the Housing Ordinance as these flats were sold at discount prices.

    "Any form of alienation of their flats, creation of a mortgage or charge over the flats is not permitted unless with prior approval of the Director of Housing," he said.

    "Any person who commits an offence of unauthorised alienation under section 27A of the Housing Ordinance is liable to a fine of $500,000 and one year's imprisonment," he added.

    The spokesman gave this reminder following a court case in which a PSPS owner was convicted and ordered to serve 100 hours of community service for committing an offence of unauthorised alienation at the Kowloon City Magistracy today.

    The owner purchased a PSPS flat in April 1989 and executed a legal charge on the same date. He applied to the Housing Department for premium assessment in November 2004. However, during the course of processing the premium application, it was noted that he had executed a loan agreement with a charge over the property without prior approval from the Director of Housing.

    The loan agreement provides, among others, that the PSPS property be charged unto the lender as security for repayment of the loan. In the event of default in payment of the loan or any of the instalments, the lender shall have the power to enter into possession of the property and to dispose of the same by public auction or private treaty.

    The spokesman noted that owners wishing to raise finance by charging their flats should pay the assessed premium to the Housing Authority to uplift the alienation restrictions before proceeding to mortgage the property.

    "Owners with genuine financial hardship, can apply for refinancing of their flats without the need to pay a premium first with prior approval from the Director of Housing," he added.

    The spokesman stressed that the department adopted a zero-tolerance policy against unauthorised alienation and would carry out prompt investigation and institute prosecution action as appropriate.

    He said that the alienation restrictions had clearly been stipulated in the application forms, sales brochure and conveyancing document before the flat purchase as well as widely publicised on the Housing Authority/Housing Department's website, hotline, and in information leaflets.

Ends/Wednesday, July 6, 2005
Issued at HKT 18:08

NNNN