Following is a question by the Hon Grace Chan and a written reply by the Secretary for Housing, Ms Winnie Ho, in the Legislative Council today (May 20):
 
Question:

     It has been reported that since the Basic Housing Units Ordinance (Cap. 658) came into effect on March 1, 2026, quite a number of tenants of subdivided units (SDUs) in residential buildings have been requested by their landlords to move out. In this connection, will the Government inform this Council:
 
(1) whether it has assessed the number of households residing in SDUs and the number of Notices of Tenancy involving SDUs endorsed by the Rating and Valuation Department (RVD) in each of the past three years; of the enforcement actions taken by the Government against SDU landlords who failed to submit a Notice of Tenancy to the RVD, as well as the number of landlords who have been prosecuted and the number of SDUs involved in the relevant enforcement actions, in each of the past three years, together with a tabulated breakdown;
 
(2) of the respective numbers of application forms for verification of Category C tenants of transitional housing (TH) submitted by SDU households that were received by the six Subdivided Unit District Service Teams (DSTs) commissioned by the Housing Bureau since October 3, 2025; among them, the respective numbers of cases that were verified and issued reference numbers by DSTs, and those which were ultimately successfully allocated with TH units (with a breakdown by the six DSTs);
 
(3) of the number of cases since October 3, 2025 in which a reference number could not be issued by DSTs due to failure to obtain from the owner or operator a Declaration of Early Termination of Tenancy Agreement Due to the Alteration Works of Subdivided Units in Residential Buildings in accordance with the Basic Housing Units Ordinance (with a breakdown by the six DSTs); and
 
(4) given that currently the rents and other charges (e.g. management fees) of different TH projects are not standardised, if TH applicants or tenants have views on the rents or charges, of the formal channels and procedures through which they can reflect to or communicate with the Government or the operating organisations; whether the Government will consider establishing a communication platform for multi-party dialogues among the operating organisations, tenants, applicants and the Administration, so as to improve the operational effectiveness of TH projects; if so, of the details; if not, the reasons for that?
 
Reply:
 
President,
 
     The current-term Government is determined to tackle the long-standing, big and difficult issue of substandard subdivided units (SDUs) in Hong Kong. The relevant Basic Housing Unit (BHU) regime is rolled out starting from March 1, 2026 under the principle of "registration first, enforcement later", with applications for registration of pre-existing SDUs, as well as applications for BHU recognition of SDUs complying with minimum standards of living conditions being accepted concurrently.
 
     The BHU regime provides a 48-month transitional arrangement (i.e. a 12-month registration period followed by a 36-month grace period upon successful registration) to allow reasonable time for SDU owners/operators to gradually adapt to the statutory requirements, with the aim of eradicating substandard SDUs in an orderly manner and improving the living conditions of grassroots households. Pre-existing SDUs, regardless of whether they comply with the minimum standards of living conditions or not, are welcome to apply for registration for free to obtain the grace period for more time in planning the next steps for the units (e.g. reaching flexible and people-oriented rental arrangements with tenants, carrying out alteration works gradually, applying for BHU recognition, etc).
 
     The criminal offence of illegal letting of SDUs with no registration and no recognition under the BHU regime will only come into effect 12 months after the commencement of the regime (i.e. effective from March 1, 2027). Flats that have been successfully registered and obtained a grace period can continue to be let out under their pre-existing tenancies until the grace period expires (i.e. on or before February 28, 2030). Therefore, the Housing Bureau (HB) will not immediately take enforcement actions in one go. Instead, the HB will adopt a pragmatic, people-oriented and risk-based approach when taking enforcement actions in a reasonable, compassionate and orderly manner against illegal letting of SDUs, so as to ensure that SDU households will not be displaced due to relevant enforcement actions.
 
     On the understanding that there may be situations in the market where SDU owners and tenants need to discuss their rental arrangements for various reasons, the HB has made strategic arrangements before the start of the grace period under the BHU regime. It is worth mentioning that since the six Subdivided Unit District Service Teams (DSTs) (website: www.hb.gov.hk/eng/policy/housing/policy/tenancy_control/dist_serv_teams.html) under the HB commenced operation in early 2022, they have been rendering immediate assistance to affected households on an on-going basis, such as assisting SDU households in need to apply for traditional public rental housing (PRH), Light Public Housing (LPH), transitional housing (TH), Hostels for Single Persons, or find other accommodation, etc. In fact, since their commencement of operation to date, the six DSTs have contacted over 14 000 SDU households and referred about 1 000 such households in need to apply for LPH/TH. Counting from 2025 to 2026 (as at now) alone, DSTs have contacted approximately 9 800 SDU households and referred about 400 such households in need to apply for LPH/TH. This demonstrates that DSTs have been working diligently in providing SDU tenants with all practical and feasible support.
 
     Prior to the roll-out of the BHU regime, some SDU tenants at Yee Wa Building in Cheung Sha Wan were requested in end-2025 to move out by their landlords. Once this incident had come to the HB's notice, the HB immediately co-ordinated with the six DSTs, especially those operated by the Hong Kong Single Parents Association and the New Home Association, to provide continuous and comprehensive support to the affected tenants. To date, DSTs have contacted the vast majority of about 150 affected households renting SDUs in Yee Wa Building. Amongst them, about 110 households have already moved out of Yee Wa Building over the past period, including relocating to LPH, TH, Hostels for Single Persons, etc with the assistance of DSTs. For the remaining 40 households that have not yet moved out and are still considering their future plans, DSTs will continue to proactively provide them with all feasible assistance to help them identify suitable accommodation. This incident reflects DSTs' ability to effectively handle unexpected cases involving relatively more households, where they have assisted the households in relocating to new accommodation through their continued liaison and co-ordination with relevant stakeholders (including landlords, principle tenants, tenants, operating organisations of LPH/TH/Hostels for Single Persons, estate agents, etc).
 
     After the roll-out of the BHU regime, DSTs have so far received 35 cases from different buildings where individual households renting SDUs were asked by their landlords to vacate within a short period of time. DSTs has assisted 10 such households in need to apply for TH, while the remaining 25 cases are being proactively followed up to ensure relevant tenants will not be displaced. Besides, to plan in advance and prevent potential forced evictions, the HB proactively identifies target buildings with SDUs that may undergo alteration works soon through various intelligence channels (such as news reports on investment and transaction of SDUs, DSTs' observations and communication with the local community). The HB will then accord priority in arranging for DSTs to conduct preventive home visits at relevant buildings, providing comprehensive support to households in need as early as possible. On the road to eradicating substandard SDUs, the HB will make utmost efforts to support affected grassroots households in improving their living conditions.
 
     Having consulted the Rating and Valuation Department (RVD), the reply to the question raised by the Hon Grace Chan is as follows:
 
(1) The Census and Statistics Department regularly conducts population censuses and compiles statistics on persons living in SDUs in residential buildings. The most recent population census was conducted in 2021, while the 2026 Population Census commenced in January 2026. The results of the 2021 Population Census showed that there were about 108 200 SDUs in Hong Kong, providing accommodation for a total of about 107 400 households.
 
     Besides, Part IVA of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) which implements tenancy control on SDUs, came into effect since January 2022. It requires landlords to submit for each SDU tenancy a completed Notice of Tenancy (Form AR2) to the RVD within 60 days after the term of the tenancy commences to notify the RVD of the particulars of the tenancy, including the address, rent, tenancy term, and the area and facilities of the SDU, etc. If a landlord, without reasonable excuse, refuses or neglects to comply with this requirement, the landlord commits an offence and is liable on conviction to a maximum fine at level 3 ($10,000). As at end-April 2026, the RVD processed 86 332 Form AR2s, and the relevant breakdown by year is as follows:
 

Financial year	Number of Form AR2
2022-23	14 116
2023-24	15 238
2024-25	23 402
2025-26	30 503
2026-27 (as at end-April 2026)	3 073
Total	86 332

 
     The RVD has been taking resolute enforcement actions to combat contraventions of requirements under SDU tenancy control, including failing to submit Form AR2 in accordance with the requirements. As at end-April 2026, the RVD's enforcement actions against cases where Form AR2 was not submitted in accordance with the requirements included prosecuting 1 222 relevant cases (each prosecution case is landlord-based; of which 935 cases were convicted in court and 287 cases are pending hearing). In addition, the RVD issued warning letters for 2 185 cases and is following up on 1 130 cases. The relevant breakdown of prosecution cases by year is as follows:
 

Financial year	Number of cases convicted in court upon prosecution for failing to submit a Form AR2 in accordance with the requirements
2022-23	1
2023-24	164
2024-25	331
2025-26	412
2026-27 (as at end April 2026)	27
Total	935

 
(2) If SDU households in need meet the eligibility for "Category A tenants" (i.e. persons/families who have waited for traditional PRH for not less than three years, or families with newborn babies who have been waiting for traditional PRH for no less than two years), or "Category B tenants" (i.e. other categories of applicants, e.g. persons/families residing in inadequate housing (including SDUs)), they may apply for TH under the relevant categories.
 
     In tandem with the implementation of the BHU regime, and considering that some SDU households may not fulfil the application criteria for LPH or TH (e.g. income/asset exceeding the limits), the HB introduced a new type of "Category C tenants" for TH in October 2025 to provide assistance to SDU households who are affected by alteration works or enforcement actions under the BHU regime and have imminent short-term rehousing needs. Applicants for "Category C tenants" need not be persons currently waiting for traditional PRH, and can be exempted from meeting the prevailing income/asset limits for TH.
 
     Since the new type of "Category C tenants" was introduced, we have received a total of four relevant applications, which were submitted by DSTs operated by the Hong Kong Single Parents Association and the New Territories Association of Societies respectively. One of the applicants already moved into "T-Loft@Lau Fau" in end-March 2026, while the other three applications received recently are being actively processed.
 
     Subject to factors such as the number of applications and the latest status of application processing, and taking into account the latest occupancy rate of individual projects as well as the recent completion of "Light Factory" in Yau Tong in end April this year, which provides about 220 units for gradual tenant intake, a total of over 500 vacant units could be available in the urban and extended urban areas for SDU households in need (including "Category C tenants") to apply for as at end April this year. In addition, noting that TH projects converted from vacant residential/non-residential buildings in urban areas have shorter planning and construction time, and remain highly popular among members of the public with imminent housing needs, we will continue to make prudent use of the remaining funds under the "Funding Scheme to Support Transitional Housing Projects by Non-government Organisations" to support non-government organisations (NGOs) in converting vacant residential buildings and non-residential buildings (such as government properties, schools and industrial buildings) in urban areas into TH. For example, we invited NGOs in March this year to participate in converting a vacant school premises in Ngau Tau Kok for TH operation, so as to provide more short-term accommodation options for members of the public with imminent housing needs (including SDU households).
 
     Moreover, since the implementation of the BHU regime, we are aware that there are suggestions of reserving some units in TH projects in urban and extended urban areas for emergency rehousing, so as to provide temporary accommodation to affected SDU households immediately and allow them sufficient time to identify other suitable accommodation. In this regard, upon proactive review, the HB considers that there is room to implement the suggestion and has planned to reserve a small number of TH units as a safety net of emergency reserve, which will provide emergency rehousing for households affected by the BHU regime who need to relocate suddenly, but are not able to identify alternative accommodation immediately, thereby preventing them from being displaced.
 
(3) Currently, "Category C tenants" applicants with imminent housing needs have already received immediate assistance from various DSTs regarding their applications for TH. So far there are no cases where the application could not be verified due to the lack of declaration form.
 
     Considering that "Category C tenants" are exempted from meeting the prevailing income/asset limits of TH, and to ensure that the precious housing resources can assist those who are most in need and to avoid potential abuses, applicants for "Category C tenants" not only need to meet the relevant eligibility criteria, but also must provide valid supporting document(s) (i.e. application form for "Category C tenant" verification) for review by the relevant DST, so as to prove their re-housing needs.
 
     If the applicant is affected by alteration works related to the BHU regime, he/she must, before undergoing the aforesaid verification, obtain a declaration from the SDU owner/operator on the early termination of tenancy agreement due to alteration works in SDUs in accordance with the Basic Housing Units Ordinance (Cap. 658), to facilitate DSTs' processing of their application. If the owner refuses to issue the above declaration to the tenant, the DSTs and TH operating organisations will exercise discretion in handling the application on a case-by-case basis, subject to the circumstances of individual cases.
 
(4) In promoting the development of TH, the HB has been monitoring the operation and management of each project, and maintaining close liaison with the operating organisations to ensure the provision of suitable services and support to the residents in every TH project.
 
     Overall speaking, TH has been highly welcomed by members of the public in need. At present, the overall occupancy rate of TH projects remains at a considerably high level. Among which, the average occupancy rate of projects in urban area is around 87 per cent, while that of projects in the New Territories exceeds 88 per cent on average. Moreover, the usage rate of as many as 37 TH projects has exceeded 100 per cent, and the unit usage rate in some projects is even higher than 190 per cent, demonstrating that TH is highly welcomed by people in need and has continuous turnovers. In view of this, the HB has not slowed its pace. As mentioned above, the "Light Factory", which provides about 220 units, was recently completed in end April this year for gradual tenant intake. It is estimated that currently over 500 vacant units are available in the urban and extended urban areas for persons with imminent housing needs to apply for.
 
     The HB understands that TH applicants and residents are highly concerned with the rent levels. Therefore, the HB has all along been regulating the rental arrangements of TH to ensure that the rents of TH projects are reasonable. Specifically, according to the agreements signed with the HB, the rents set by the operating organisations must be at a level which is lower than the market rent in the same district, and the ceiling of the rent should not exceed 30 per cent of the prevailing income limit for traditional PRH for the corresponding household size. When setting the rents for TH projects and making subsequent rent adjustments, the operating organisations are required to apply to the HB for approval. At the same time, TH is operated by NGOs on a non-profit-making and self-financing basis, with regard to their service features and operating principles. Since the design, location, operation mode, services and facilities provided, etc vary across projects, the HB allows the operating organisations to determine the rent levels on their own within the regulated framework, and hence the rents differ across projects. Nevertheless, various organisations have provided rent reductions or subsidies on a need basis to households with financial difficulties. 
 
     In addition, the HB has also reminded the operating organisations that they must clearly set out in the tenancy agreements, project websites and other publicity materials the rent payable by tenants, as well as other fees that the tenants need to handle and pay on their own (such as management fees, water/electricity charges, internet fees, etc). If the operating organisations need to charge tenants any fees other than the rent, they must clearly explain the amount and calculation method of such fees before signing the tenancy agreement with the tenants.
 
     Besides, to enhance communication with the various operating organisations of TH, the HB has held regular meetings with the operating organisations since March 2023 to exchange views on various issues and suggestions pertaining to TH. We have held nine meetings so far and deliberated on, among others, operation details, application mechanism, adjustment of tenant ratio, publicity, etc, as well as explored ways for improvements to jointly promote the continued development of TH. If members of the public have any views or suggestions regarding TH (including rent), they may raise them to the HB or relevant operating organisations at any time. We will follow up with the organisations as appropriate according to the actual circumstances.

Ends/Wednesday, May 20, 2026
Issued at HKT 16:18

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