LCQ8: White Form Secondary Market Scheme
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Question:
In response to the aspiration of the sandwich class to buy their own homes, the Hong Kong Housing Authority (HA) has implemented the White Form Secondary Market Scheme (WSM) to allow persons eligible for White Form status and allocated with quotas (White Form buyers) to buy one flat with premium unpaid in the secondary market of subsidised sale housing flats (collectively referred to as "Home Ownership Scheme flats" or "HOS flats"). In this connection, will the Government inform this Council:
(1) regarding the relevant interim scheme launched in 2013 and 2015, as well as each of the WSM exercises launched since 2018 upon regularisation of WSM, of the respective numbers of (i) eligible applications received from, as well as (ii) Certificate of Eligibility to Purchase (CEP) and (iii) "Letter of Nomination" issued to, (a) family applicants and (b) one-person applicants, by HA/the Hong Kong Housing Society (set out in the table below);
| Year of WSM | Quota | (i) | (ii) | (iii) | |||
| (a) | (b) | (a) | (b) | (a) | (b) | ||
| Interim scheme of 2013 | 5 000 | ||||||
| Interim scheme of 2015 | 2 500 | ||||||
| 2018 | 2 500 | ||||||
| 2019 | 3 000 | ||||||
| 2020 | 4 500 | ||||||
| 2022 | 4 500 | ||||||
(2) given that the maximum mortgage default guarantee period (guarantee period) provided by HA for HOS flat buyers is 30 years counting from the date of the first assignment of the flats, of the number and percentage, as at December this year, of flats in respect of which 20 years or above of the guarantee period have been spent, among those flats available for selection and purchase by White Form buyers; and
(3) as it is learnt that amid the epidemic, quite a number of prospective White Form buyers have difficulties in making appointments to meet with flat owners and visit the flats, making the one-year validity period of CEP not long enough for them to select and purchase HOS flats, whether the Government will consider extending the validity period; if so, of the details; if not, the reasons for that?
Reply:
President,
In response to the question raised by Dr the Hon Wendy Hong, our reply is as follows:
(1) The numbers of application, Certificate of Eligibility to Purchase (CEP) and Letter of Nomination (LN) under the White Form Secondary Market Scheme (WSM) in the Hong Kong Housing Authority's (HA) Secondary Market and the Hong Kong Housing Society's (HKHS) Flat-for-Sale Scheme Secondary Market are set out at Annex.
(2) To encourage banks and authorised financial institutions to provide better mortgage terms to subsidised sale flats (SSFs) purchasers, the HA provides a mortgage default guarantee to participating banks and authorised financial institutions (participating financial institutions). According to the Deed of Guarantee (DoG) entered between the HA and the participating financial institutions, the HA undertakes to meet the shortfall in repayment in the event of default by the mortgagors of SSFs during the mortgage default guarantee period under specified circumstances as set out in the applicable DoG. As provided in the prevailing DoG, the maximum mortgage default guarantee period for Home Ownership Scheme (HOS) and Green Form Subsidised Home Ownership Scheme (GSH) flats is 30 years, counting from the date of the first assignment of the flats.
According to the latest figures available, as at end-September 2022, there were around 271 000 HOS/GSH flats with premium unpaid. As some of the HOS flats were put up for sale in the early years, the HA does not have information on the date of first assignment of these flats. Assuming that the completion dates of these HOS/GSH developments are the same as the dates of first assignment of all the flats in the same development, we could roughly estimate the residual mortgage default guarantee period of these flats. There were around 78 000 flats with a residual guarantee period of 10 years or below, accounting for around 30 per cent of the total number of such flats.
(3) Under the current arrangement, a CEP is valid for 12 months from the date of issue. CEP holders may enter into a Provisional Agreement for Sale and Purchase (PASP) to purchase SSFs with premium unpaid within the validity period of CEP. The solicitor representing the purchaser needs to apply with the HA/HKHS (depending on the flat concerned) for an LN within one month from the date of PASP. Only having obtained the relevant LN may the purchaser enter into the formal Agreement for Sale and Purchase and the Deed of Assignment to complete the transaction.
In view of the COVID-19 pandemic, the HA endorsed in November 2020 the granting of a one-off extension of the validity period of CEP issued under WSM 2019 (for holders who have not been issued with an LN) until April 30, 2021.
Extending the CEP validity period on a regular basis will render the validity period of the CEPs of one WSM exercise overlapping with that of the next exercise, which will in effect increase the overall demand of SSFs in the Secondary Market. This may create an upward pressure for the price of SSFs in the Secondary Market, adversely affecting other buyers, including those Green Formers who would like to purchase property in the Secondary Market.
Ends/Wednesday, December 14, 2022
Issued at HKT 12:25
Issued at HKT 12:25
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