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Following is a question by the Hon Frederick Fung Kin-kee and a written reply by the Secretary for Transport and Housing, Ms Eva Cheng, in the Legislative Council today (March 2):
Question:
Since the approach of revitalising the Home Ownership Scheme ("HOS") Secondary Market was proposed in the 2010-2011 Budget, the authorities have introduced a number of revitalisation measures for HOS, including the Premium Loan Guarantee Scheme ("PLGS") launched in September last year by the Hong Kong Mortgage Corporation, which allows HOS owners to pay the premium by instalments, with a view to facilitating the turnover of HOS flats and increasing the supply of flats on the market; yet, it was reported in the press on January 22 this year that no application had been received under PLGS, thus casting doubt on the effectiveness of the revitalisation measures. In this connection, will the Government inform this Council:
(a) of the latest number of applications for PLGS and the number of enquiries made by HOS owners on PLGS; whether the authorities have assessed if there is a significant difference when comparing the present response of HOS owners to PLGS and the anticipated response; if such an assessment has been made, of the outcome, and whether they have looked into the reasons involved, whether it has revealed that the authorities, when exploring measures for revitalising the HOS Secondary Market in the past, have not carefully considered and properly assessed the situation (such as failing to get hold of the facts that HOS owners are mostly occupiers and are not keen to sell their flats, and that the revitalisation measures have limited effect on boosting the supply of HOS flats, etc.); and;
(b) given that there are comments that the revitalisation measures have failed to yield satisfactory results, whether the authorities will consider conducting a comprehensive review of the revitalisation measures for the HOS Secondary Market; whether they will consider introducing other enhancement measures, or even shelving PLGS and resuming the construction of HOS flats to increase the supply of flats in the market, so as to assist the middle and lower classes in acquiring their homes; if not, of the reason for that?
Reply:
President,
(a) The Hong Kong Mortgage Corporation Limited (HKMC) announced the Premium Loan Guarantee Scheme (the Scheme) in September 2010 as one of the Government's measures to revitalise the Home Ownership Scheme (HOS) Secondary Market. Under the Scheme, the HKMC provides a guarantee arrangement so that banks can offer a premium loan for HOS owners who wish to settle their premium payment. Once the HOS owners obtain the loan and pay the premium to the Hong Kong Housing Authority (HA), their flats will be freed from alienation restrictions. The owners can then settle the premium loan by instalments.
As at February 25, 2011, five banks have participated in the Scheme and the HKMC is in discussion with two other interested banks to confirm their participation. The participating banks are preparing for the introduction of the premium loan. They will develop related mortgage products in accordance with their marketing and product promotion strategies, and will announce the launch of their products when they are ready. At this stage they have not entered the phase of accepting applications. According to the information provided by the HKMC, the enquiry hotline launched by the HKMC in September 2010 has received around 360 enquiries (as at February 25, 2011) from the public.
The Scheme is a market-based initiative. It is not designed to encourage the HOS flat owners to settle their premium payment or to dispose of their flats. It is a matter of personal choice for the HOS flat owners to decide whether to make an early settlement of the premium payment after taking into account their individual family circumstances. The Scheme aims to provide an additional platform for HOS owners in need to finance their premium payment to the HA. For example, some elderly households may wish to move to smaller flats upon departure of their children and some households may prefer moving to flats near to their place of work. There are also some flat owners who may have purchased another home and wish to let out their flats to finance their premium payment through instalments by using the rental income. The Government will liaise with the HKMC to consider how to publicise the Scheme among HOS owners, for example, by distributing information leaflets to HOS flat owners, and providing more information on the website, etc. The HKMC will also discuss with the banks to enhance publicity of the products.
(b) Under the HOS Secondary Market Scheme launched in 1997, HOS flat owners are allowed to sell their flats to existing or prospective public rental housing (PRH) tenants without payment of premium. The PRH flats vacated by these tenants can then be reallocated to those in need. In 2010, the HA implemented a few measures to revitalise the HOS Secondary Market. In addition to the Premium Loan Guarantee Scheme mentioned above, the HA extended the mortgage default guarantee period for HOS buyers to 30 years, and also streamlined the administrative arrangement and enhanced publicity. These measures have been in place for a relatively short period of time. We will continue to closely monitor their implementation.
Regarding the resumption of the HOS, some members of the public support it because they hope that there will be more affordable flats in the market. The Government understands their concern and aspiration and has learned from the experience of previous subsidised home ownership schemes. The Government has announced that, in collaboration with the Hong Kong Housing Society (HKHS), it has introduced the My Home Purchase Plan (MHPP) premised on the concept of "rent-and-buy". The MHPP will more effectively target at households with the ability to pay mortgages in the long run, but which cannot immediately afford the down payment in the face of short-term property price fluctuations, and to allow such potential home buyers some time to save up for their home purchase. Under the MHPP, the Government will provide land for the HKHS to build "no-frills" small and medium-sized flats for lease to eligible applicants at prevailing market rent. The tenancy period will be up to five years, within which the rent will not be adjusted. Within a specified time frame, MHPP tenants may purchase a MHPP flat at prevailing market price, or a flat in the private market. They will receive a Purchase Subsidy equivalent to half of the net rental they have paid during the tenancy period, and use it for part of the down payment.
In the long run, the Government will increase land supply in response to market demand so as to tackle the problem at source. In the next decade, the Government has set a target of making available land for the construction of an average of about 20,000 private residential flats each year. It is estimated that housing land to be made available in 2011/12 will provide a total of 30,000 to 40, 000 private residential flats. The Government will also put up for sale by tender five residential sites in 2011/12, and restricting in the sale conditions their use for construction of about 3,000 small and medium-sized flats in total. This will help increase the supply of small and medium-sized flats. In addition, the West Rail Property Development Limited has redesigned six property developments above MTR stations along the West Rail in respect of which master layout plans and building plans have been approved. This will also help increase the supply of small and medium-sized flats.
MHPP, together with the measures to increase housing land supply including housing land for small and medium-sized flats, as well as the initiatives to revitalise the HOS Secondary Market, will help increase the choice of accommodation available and thus cater for different housing needs. In general, the Government will provide people of different affordability with different levels of housing options. The first level is PRH provided for low-income families who cannot afford private rental accommodation. Above PRH is the second-hand HOS flats in the HOS Secondary Market where HOS owners may sell their flats to Green Form applicants without paying premium. The next levels are flats of lower prices (including HOS flats sold in the open market) in the private property market targeting the general public and the MHPP flats. In the private property sector, residential flats at various market prices are also available in both the primary and secondary markets to satisfy the diverse demands of buyers.
Ends/Wednesday, March 2, 2011
Issued at HKT 13:12
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