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LCQ17: Rational allocation of public rental housing resources

     Following is a question by the Hon James Tien and a written reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (December 18):


     There are comments that the current number of applications on the Waiting List for public rental housing (PRH) has already exceeded 230 000 but the Housing Subsidy Policy and the Policy on Safeguarding Rational Allocation of Public Housing Resources (commonly known as "Well-off Tenants Policies") have failed to achieve the objective of ensuring rational allocation of the limited public rental housing resources by encouraging well-off tenants to vacate their PRH flats. In this connection, will the Government inform this Council:

(a) of the detailed justifications for each of the following requirements of the Well-off Tenants Policies:

(i) that the minimum length of residence for declaration of household income and/or assets be set at 10 years, and not a shorter period;

(ii) that the thresholds of household income for payment of 1.5 times and double net rent plus rates be set at two and three times of Waiting List Income Limits (WLILs) respectively; and

(iii) that the threshold of net household asset value for vacation of PRH flats be set at 84 times of WLILs;

(b) of the number of well-off tenants and the percentage of such number in the total number of PRH households in each of the past five years, with a breakdown by the level of the rents paid by such well-off tenants (i.e. 1.5 times rents, double rents or market rents);

(c) of the number of well-off tenants who vacated their PRH flats in each of the past five years and, among such tenants, the number of those who vacated their flats upon purchase of Home Ownership Scheme flats;

(d) whether it has studied the feasibility of the following suggestion which aims at boosting the turnover of PRH flats: where for three consecutive years the total monthly household income of a household has reached the level at which the household is required to pay double rent, such household is required to vacate its PRH flat within the three years immediately following, and upon vacation, the household will be refunded half of the total amount of double rent paid as subvention and be exempted from the requirement of restoring the rescinded PRH flat to its original form; if it has, of the details; if not, the reasons for that; and

(e) whether it has considered converting the current tenancies of PRH flats, which bear no time limit, into fixed-term tenancies to ensure that precious public rental housing resources are allocated to needier people; if it has, of the details; if not, the reasons for that?



     The Government's housing policy is to provide public rental housing (PRH) for low income families who cannot afford private rental accommodation. To ensure the rational allocation of limited public housing resources, the Hong Kong Housing Authority (HA) always encourages PRH households who have benefited from a steady improvement in their income and assets to return their PRH flats to the HA for reallocation to families that are more in need. In 1987 and 1996, the HA implemented the Housing Subsidy Policy (HSP) and the Policy on Safeguarding Rational Allocation of Public Housing Resources respectively, collectively referred to as the "Well-off Tenants Policies". The objective is to reduce the level of subsidy given to "comparatively well off" tenants, using the two factors of "income" and "assets" to determine the appropriate subsidised level for PRH.

     Under the "Well-off Tenants Policies", households that have lived in PRH for ten years or more are required to declare their household income biennially. Depending on the income levels, those with a household income exceeding the Waiting List (WL) income limits are required to pay 1.5 times or double net rent plus rates. Households who are paying double rent are also required to declare their assets biennially. If their household assets exceed the WL income limits by 84 times, or if tenants refused to declare assets, they are required to move out from their PRH flats. If tenants have difficulties moving out from their flats by the specified date, the HA could grant the tenants a licence to allow them to stay in their PRH flats temporarily for a period of not more than 12 months. During this period, they need to pay a licence fee equivalent to the double net rent plus rates or market rent, whichever is the higher.

     My reply to the five-part question raised by the Hon James Tien is as follows:

(a) Households that have lived in PRH for ten years or more are required to declare their household income biennially. The rationale for setting a period of ten-year time back then is that this allows tenants a reasonable period of security during which they may be able to improve their economic circumstances. With an increase in family income exceeding reasonable standards, the level of public housing subsidy can be reduced.

     The HSP was implemented gradually since 1987.  Given that quite a number of concern groups had all along expressed different views on this policy, the HA decided to set up an Ad Hoc Committee to Review the Housing Subsidy Policy (Ad Hoc Committee) in July 1991 to comprehensively review the implementation of the HSP. The Ad Hoc Committee subsequently recommended that households with income between two to three times the WL income limits should pay 1.5 times net rent plus rates whereas income exceeding three times the WL income limits should pay double net rent plus rates.  The HA endorsed and accepted the Ad Hoc Committee's recommendations on March 25, 1993 and the relevant recommendations were implemented since April 1, 1993.

     The net asset limit of 84 times of the WL incoming limit was introduced in 2002. The level was derived by dividing the average discounted sale price of a three-bedroom Home Ownership Scheme (HOS) flat (with a saleable area of 60 square meters) in the urban area before the cessation for sale of HOS flats in 2002 by the WL income limit of a four-person household. The rationale is that if a PRH household could buy a three-bedroom HOS flat in the urban area without mortgage, it is clear that the household does not need public housing subsidy and should move out from the PRH flat.
(b) In the past five years, the number of PRH tenants paying additional rents are shown in annex 1.

(c) In the past five years, the number of "well-off tenants" who moved out from their PRH flats are shown in annex 2.

(d) and (e) As mentioned above, the HA formulated the "Well-off Tenants Policies" to facilitate the turnover of PRH flats, so that the HA could allocate PRH flats to those families which are most in need. All along, there have been divergent views in the community on the "Well-off Tenants Policies".  The public consultation document on the Long Term Housing Strategy (LTHS) has also put up views and recommendations on the "Well-off Tenants Policies". The Government will forward all the views on the "Well-off Tenants Policies" received during the LTHS public consultation exercise to the HA for consideration. As for the Hon Tien's suggestions as expressed in his question, we will also pass them to HA for consideration.

Ends/Wednesday, December 18, 2013
Issued at HKT 14:15


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