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LCQ15: Subsidised housing for sandwich class
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     Following is a question by the Hon Ronny Tong and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (December 12):

Question:

     Several years ago, the Hong Kong Housing Society was entrusted by the Government to implement the Sandwich Class Housing Scheme (SCHS) to enable middle-income families, whose income had exceeded the income limits for the Home Ownership Scheme (HOS) but was insufficient for buying private residential properties, to buy residential flats at concessionary prices.  Altogether 10 SCHS developments were completed between the completion of the first one in 1995 and the Government's decision to suspend the sale of subsidised housing flats in 2001.  Some SCHS owners have told me repeatedly that the Government does not have a policy to help the sandwich class purchase their homes and has never taken heed of their plights in housing.  In response to the increasing public demand for home ownership, the Government has introduced "My Home Purchase Plan" (MHPP), resumed HOS and will allow eligible white form HOS applicants (WF applicants) to purchase HOS flats with premium not paid in the Secondary Market, but it has not mentioned the secondary market of SCHS.  In this connection, will the Government inform this Council:

(a) of the number of cases in which the owners of SCHS, HOS and the Tenant Purchase Scheme (TPS) flats paid premium for their flats in the past decade and the total amount of premium paid;

(b) of the number and percentage of cases of first-hand owners of SCHS, HOS and TPS flats selling their flats in the past decade;

(c) as the Hong Kong Housing Authority decided last month to significantly increase the income limits of WF applicants for buying HOS flats with premium not paid (i.e. for households with two members or more the limit is increased to $40,000 a month), and that the new income limits are close to those for SCHS applicants (i.e. $25,000 to $50,000 a month) in those years, whether the Government will consider extending the scheme to include SCHS flats and allow SCHS flat owners to sell their flats with premium not paid, so as to boost the market turnover of SCHS flats; if it will not, of the reasons for that; and

(d) as the MHPP which will be introduced soon is similar to SCHS in that the prices of its flats fall between those of private residential flats and HOS flats, with the objective of providing the group of individuals or families with higher income the opportunities to purchase their homes, but the number of such flats is small, whether the Government will consider allowing eligible MHPP applicants to buy SCHS flats with premium not paid; if it will not, of the reasons for that?

Reply:

President,

     The Sandwich Class Housing Scheme (SCHS) announced in 1992 aimed to provide affordable housing to middle-income families whose income was above the Home Ownership Scheme's (HOS) income limit but were unable to afford private housing.  There were altogether ten SCHS projects, providing a total of 8 920 flats. Following the Government's repositioned housing policy in 2002, SCHS came to an end in 2003.  

     The Greenview Villa, (i.e. the Tsing Luk Street project), which was originally the first project under the My Home Purchase Plan (MHPP), will be sold to eligible applicants at a discounted price so as to increase the supply of subsidised sale flats to address the home ownership needs of the public.  For the remaining sites that were originally planned for the MHPP, we are inclined to use most of the sites for development of subsidised housing flats.  Details for the sale of remaining sites will be announced in due course.
P
     The consolidated reply to the four-part question is as follows:

(a) The number of cases of premium payment and the amount involved for SCHS, HOS and Tenants Purchase Scheme (TPS) flats from 2003 to 2012 (up to end-October) are as follows V
 
Year                   Premium Payment Cases

          SCHS             HOS              TPS
     Number  Amount   Number  Amount   Number Amount
     of      ($ mil-  of      ($ mil-  of     ($ mil-
     cases    lion)   cases    lion)   cases   lion)

2003    86    43.2    2 476    633.6      1     0.3
2004   159    89.9    3 534  1,108.0     19     7.5
2005   221   134.2    3 391  1,287.2     35    13.0
2006   166    95.8    2 405    958.9     66    24.9
2007   250   148.4    2 838  1,178.0    137    53.3
2008   268   176.2    2 665  1,333.4    154    71.6
2009   239   155.3    2 667  1,357.1    175    86.5
2010   221   169.3    2 890  1,758.4    261   161.2
2011   154   148.3    1 817  1,367.2    222   174.2
2012   121   129.3    1 216    981.6    172   153.4
(up to end-October)

(b) Under the Housing Ordinance, upon expiration of the resale restriction period or if the Housing Authority (HA) has declined the owner's offer to sell within the period, the resale restriction would be lifted after the HOS or TPS flat owner has paid the premium.  Thereafter, these flats are regarded as private sector flats and the owners are free to sell them.  Nevertheless, we can still find out if HOS and TPS flats with premium paid are transacted in the open market from the records of Land Registry on registered Agreements for Sale and Purchase.  However, these records are merely the number of transactions.  We cannot distinguish whether the flats in the records are first-hand sale.  Also, we are not able to tell whether two transactions in the records involve the same flat.

     Besides, from the third year after the first assignment, HOS and TPS flat owners can sell their flats with premium not yet paid to eligible persons as certified by HA under the HOS Secondary Market Scheme (SMS).  After the eligible persons have bought the flats with premium not yet paid, they can also sell the flats to other eligible persons as certified by the HA without payment of premium.  Under the SMS, the solicitor representing the purchaser of a HOS or TPS flat with premium not yet paid has to apply to the HA for the "Letter of Nomination" within one month upon the Provisional Agreement for Sale and Purchase is signed.  The Agreement for Sale and Purchase and Deed of Assignment can only be executed after the "Letter of Nomination" has been issued.  Therefore, the HA's record of transactions on the Secondary Market is merely the number of cases of "Letter of Nomination" issued for HOS and TPS flats with premium not yet paid.  In the past ten years, HA has issued a total of 20 032 "Letters of Nomination" in respect of HOS and TPS flats with premium not yet paid.  Yet, we cannot distinguish whether the flats in the record are first-hand sale.  We are also not able to tell whether two transactions in the record involve the same flat.

     For SCHS flats, there were similar resale restriction arrangements in the assignments of SCHS flats of the Hong Kong Housing Society (HKHS).  HKHS does not have the records of first-hand owners of SCHS flats selling their flats after paying the premium.   

(c) and (d) Under the current situation where land resources are in tight supply, we consider that public resources should target at households with a monthly income of $40,000 or below in meeting their home ownership needs since this income group is, relatively speaking, more in need of the Government's support in this respect.  This is also the household income limit for the White Form household applicants of both HOS and the Greenview Villa.  

     On the suggestion to allow certain types of buyers to also purchase SCHS flats without the need to pay premium, it should be noted that at present, there is no secondary market per se for SCHS.  The suggestion requires careful consideration, bearing in mind the Government's housing policy, the possible impact on the housing market of such a scheme, etc.

Ends/Wednesday, December 12, 2012
Issued at HKT 13:22

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