6.1 The public rental housing programme is one of Hong Kong's greatest social achievements. By providing decent accommodation for low income families who cannot otherwise afford adequate housing, the public housing programme has helped to foster social stability and harmony which in turn have contributed to the economic prosperity of Hong Kong. Over the years, the HA's public rental housing stock has increased to over 660 000 flats today, and the quality of living has improved with better design and space standards.
6.2 Despite this record, we estimate that there are still up to 170 000 families who are living in shared or non-self-contained accommodation in squatter areas, old urban areas and temporary housing areas. They may or may not be among the 150 000 applicants on the Waiting List. Looking to the future, new immigrants from China will add pressure to the demand for both public and private rental housing and, meanwhile, will aggravate the overcrowded living conditions in our older urban areas.
6.3 The large number of households who are still inadequately housed, is a matter of great concern. It underlines the need for the Government's continuing commitment to provide public rental housing to those in genuine need.
6.4 But there is another side to this problem. Public rental housing is heavily subsidised by the community. It takes up considerable resources both in terms of land and funds. Total expenditure by the HA on rental housing in 1996-97 is estimated to amount to some $14 billion, or about 6% of total public expenditure. In 1997-98, we estimate that the average subsidy per rental flat will amount to some $230 a month, or 15% of operating costs. This excludes the historical value of land granted to the HA for rental housing, which alone amounts to some $130 billion. More worryingly, the domestic operating account of the HA is running at an increasing deficit, which is forecast to grow to some $6 billion for the five-year period up to March 200110 . At the same time, a survey conducted by the HA in 1995 showed that 13% of public rental tenants owned private domestic property. And the HA recovers, on average, some 60 flats a month from tenants who are found to be no longer living in public housing.
6.5 The problem can be summarised as follows -
| (a) | on the one hand, despite the huge, and growing, amount of resources committed each year to providing public rental housing, there are still many families in genuine need of public rental housing; and | |
| (b) | on the other hand, there are many public housing tenants who are no longer in genuine need of the very large subsidy they currently enjoy, often paying a smaller proportion of their household income in rent for better accommodation in the public sector than is being paid by more needy families living in sub-standard accommodation in the private sector. |
6.6 The solution to this problem is to ensure that public housing resources are effectively mobilised to help those who have a genuine need for housing assistance. The HA has taken important steps to ensure a more equitable allocation of limited public housing resources, in particular through the measures announced last year to require better-off tenants to pay market rent or to move out. But we need to do more. We believe that, in the interests of the whole community, we should take further measures to ensure that -
| (a) | the allocation of public rental housing is based on genuine need; | |
| (b) | public housing rents truly reflect tenants' ability to pay; and | |
| (c) | public rental housing is provided to those who are most in need of assistance. |
6.7 We believe that, as a matter of equity, we must ensure that our limited public rental housing resources are given only to those in genuine need of subsidy. If we do not, an unfair burden will fall on the general community. And we will be less able to help those who are in genuine need of housing assistance. To ensure that the allocation of subsidy is based on genuine need, we believe that the right to enter and stay in public rental housing should be means tested. But we accept that we should continue to provide interim housing for those families who fail the means test or other eligibility criteria but who may otherwise be made temporarily homeless.
6.8 These measures are designed primarily to underline the principle of equity. But they should also help to increase the supply of public rental flats available for re-allocation to those who are in genuine need. At the same time, we should examine ways to minimise the pre-emption of supply, arising either through the loss of public rental flats upon redevelopment or through the allocation of flats to 'committed categories'.
6.9 A large proportion of public rental flats available each year for allocation is now taken up by committed categories, including clearances and redevelopment, compassionate and emergency rehousing. Households in these categories are exempt from means testing to establish their eligibility for public housing. This exemption goes against the basic principle of allocating public housing subsidy on the basis of genuine need, that is, to those who really cannot afford adequate housing in the private sector.
6.10 We believe that it is both fair and reasonable that all prospective tenants should be subject to the same eligibility criteria for public rental housing, including means testing. The two key measures of financial means are income and assets.
6.11 At present, applicants on the HA's Waiting List are means tested to establish eligibility. To qualify for public rental housing, their household income must not exceed specified limits, and they must not own private domestic property. Families displaced by the Government's clearances are not subject to the income test. And if they fail to meet the private property ownership test, they are still offered interim housing.
6.12 After ten years' residence and every two years thereafter, HA tenants are required to make an income declaration. Those whose household income exceeds specified limits are required to pay extra rent. Last year, the HA introduced measures to require double rent payers to undergo a comprehensive means test, covering both income and net assets, every two years thereafter. These measures are a step in the right direction towards ensuring greater equity. We fully support them. But we need to go further.
6.13 We believe that a comprehensive means test, covering both income and net assets, should be applied to applicants before they are given public rental flats. More specifically, we propose that -
| (a) | all prospective tenants ( subject to a few minor exceptions11) should be required to undergo a comprehensive means test, covering both income and net assets, before entry. Income limits should continue to be derived according to the current formula. Net asset limits would need to be set at appropriate levels; and | |
| (b) | families displaced by clearance operations who fail the means test should be offered interim housing as they may still have a temporary need for housing. But their length of stay in interim housing should be restricted to a limited period of, say, one year. During this period, they will be given priority for the purchase of HOS/PSPS flats or the grant of HPLS loans, subject to meeting the normal eligibility criteria. |
We propose to invite the HA to work out the details for such arrangements, including the implications for demand (and land requirements) for both interim housing and subsidised home ownership schemes.
6.14 At present, the tenancy of a public rental flat may be passed onto the surviving spouse, without means testing, upon the death of the principal tenant. Where there is no surviving spouse, the tenancy may be granted to another adult member of the same household, subject to an income test. Where appropriate, additional rent is charged.
6.15 We feel that public rental tenancies should not be allowed to be passed on from one generation to the next as a matter of course. Grant of a new tenancy (other than to the surviving spouse) should be justified on the basis of genuine need. We propose therefore that -
| (a) | the adult members of a deceased tenant's family (with the exception of the surviving spouse) should be required to undergo a comprehensive means test, covering both income and net assets, before the grant of a new tenancy and, where necessary, to pay extra rent; and | |
| (b) | adult members who fail the means test should be allowed to stay temporarily in public rental housing, as they may still have a temporary need for housing. But they should be required to pay market rent and their length of stay should be restricted to a limited period of, say, one year. |
Again, we propose to invite the HA to work out the details for such arrangements.
6.16 By ensuring the allocation of public rental flats on the basis of genuine need, the measures outlined above should help us to reduce the waiting time for public housing. However, it is also important that we should minimise the pre-emption of available public rental housing supply by committed categories. We propose therefore that the HA should consider -
|
(a) |
to confine any future redevelopment of HA estates, following the completion of the HA's Comprehensive Redevelopment Programme in 2005, to selected blocks determined by need, and having regard to structural conditions and build-back potential; | |
|
(b) |
to require applications for transfer which would involve the allocation of an additional flat to be made through the Waiting List; | |
|
(c) |
to make no further change to the current space allocation standards for public rental flats until outstanding demand on the Waiting List has been substantially met; and | |
|
(d) |
to require eligible households living in interim housing to register on the Waiting List, so as to help ensure a more equitable allocation of public housing resources. |
6.17 Rents for public housing are determined on the basis of tenants' ability to pay. The principle of affordability is translated into two median rent-to-income ratio ceilings. In setting rent levels, the HA takes into account inflation, rates, its own operating costs and the relative value of the estate. But its overall aim is to ensure that the median rent-to-income ratios for each estate do not exceed -
|
(a) |
15% in respect of the minimum space allocation standard of 5.5 square metres internal floor area per person; and | |
|
(b) |
18.5% in respect the higher space allocation standard of 7 square metres or more per person. |
6.18 Furthermore, the HA provides temporary rent relief to tenants who face financial hardship12 . This reduction in rent is provided for up to two years, subject to review after 12 months. Tenants who continue to face difficulty after two years may be required to transfer to cheaper housing in the same district, with a domestic removal allowance and a rent-free period of one month.
6.19 We fully support the principle of affordability, and the continued provision of temporary relief to those in need. But the simple fact is that rents are now, for the majority of tenants, well below what could reasonably be said to be affordable. Over the years, the increases in public housing rents have not kept pace with the rise in real incomes. As a result, the median rent-to-income ratio for HA tenants as a whole is now only about 9%.
6.20 Public housing rents represent, on average, about 27% of the market rent for comparable flats in the private sector. While we accept that public housing rents should be below market levels, we also believe that, at current levels, public housing rents no longer reflect the ability to pay. Nor do they cover the recurrent costs incurred by the HA in maintaining and managing public rental estates. Furthermore, low rents, coupled with rising standards, are a major disincentive for better-off tenants to move out of public rental housing.
6.21 For all these reasons, we propose that, as a matter of equity, the HA should consider increasing rents gradually to more realistic but still affordable levels so as to better reflect the ability to pay, whilst maintaining the Rent Assistance Scheme for families in need. In particular, we propose that -
|
(a) |
rents for new public rental estates (of Harmony block design) should be set and maintained at a level sufficient to achieve median rent-to-income ratios of 15% or 18.5% (for the relevant space allocation standard)13 ; | |
|
(b) |
similarly, rents for existing estates should be increased progressively to achieve median rent-to-income ratios of 15% or 18.5% (for the relevant space allocation standard), having regard to relative estate values, over the period to 2006; and | |
|
(c) |
the Rent Assistance Scheme should be reviewed and revised as necessary to ensure that adequate assistance continues to be available to those families facing genuine hardship. |
6.22 The proposals to means-test the right to enjoy public rental housing, and to raise public housing rents gradually to more reasonable levels are designed to ensure greater equity in the allocation of the community's limited public housing resources. But they also reflect the wish to give priority to those in greatest need of assistance. These measures should help to increase the supply of flats available for re-allocation to needy families. But, at the same time, we should consider whether further assistance is required for vulnerable groups. We have concluded that we should focus more attention on helping the elderly in particular.
6.23 Elderly persons, in particular elderly single persons, represent a substantial proportion of total housing demand. In recent years, the number of small households has increased very rapidly. This reflects two trends : an ageing population, and a decline in household size. There are currently estimated to be about 280 000 one-person households, or about 15% of all households in Hong Kong. About one-third of these single persons are elderly. By 2005, the number of one-person households is estimated to rise to some 315 000, an increase of 14%.
6.24 Not all of these single persons will qualify or wish to live in public housing. However, some will. At present, about 60 000 single persons are accommodated in public rental housing, or about 20% of the total. (Of these, about 43 000, or about 70%, are elderly persons.) Over the next five years to 2001, the HA plans to allocate a further 55 000 small flats to eligible single persons. (About 50% of these flats will be allocated to the elderly.) We will continue to monitor the trend, and to take timely action to meet the housing needs of eligible members of this group.
6.25 The HA also operates four priority schemes to speed up the allocation of public rental flats to the elderly. It makes offers of public rental housing -
| (a) | to elderly single persons applying for Housing for Senior Citizens flats within two years of registration; | |
| (b) | to elderly single persons who are prepared to share accommodation with other elderly persons, also within two years of registration; | |
| (c) | to families with elderly members, three years earlier than normal; and | |
| (d) | to families with elderly members who require two flats and who are willing to be housed in New Towns, one year earlier than normal. |
6.26 These schemes have been successful in helping to provide assistance more quickly to elderly persons in genuine need, and to encourage families to look after their elderly members. At the same time, we wish to provide a wider choice of accommodation suited to the needs of the elderly. We propose therefore to provide the Housing Society with some suitable small sites for the construction of affordable housing for sale or rent to eligible elderly persons. This new initiative is designed to provide suitable accommodation for those elderly persons in the middle income group who are able to look after themselves.
6.27 Apart from elderly singletons, an increasing number of able-bodied middle-aged single persons encounter difficulty in obtaining adequate housing in the private sector. We support therefore the measures being taken by the HA to increase the supply of small public rental flats for allocation to eligible single persons, which will help to meet the needs of this group. In addition, we are providing alternative accommodation for bedspace apartment lodgers displaced as a result of the introduction in 1998 of a licensing scheme14 .
6.28 We also feel that the private sector should be encouraged to provide affordable housing for single persons, with priority being given to the elderly. We welcome suggestions on how best to achieve this aim.
6.29 In considering how best to help those in greatest need, it is important also to review the Government's clearance policy. As a result of clearances over the years, the total squatter population has dropped from about 440 000 in 1986 to about 240 000 today. It remains our objective to improve the living conditions of those who are inadequately housed, including squatters. However, squatter structures on government or private land, as well as roof-top structures, while illegal, do not necessarily represent inadequate housing. Nor would it be a sensible use of our limited resources to clear all the structures, irrespective of the future land use of the areas affected.
6.30 Cottage Areas represent a special case. In the early 1950s, the Social Welfare Department conducted a registration of the natural disaster victims of squatter areas and issued a Temporary Identity Card (commonly known as the "white card") to them. In order to alleviate the problem of homelessness, the Emergency (Resettlement Area) Ordinance was enacted in 1952. Under the Ordinance, the Urban Council was authorised to designate certain areas as Cottage Areas for the construction of cottages by approved building contractors according to standard layout plans and designs. These cottages were then sold by the building contractors to persons who were in possession of Temporary Identity Cards. The Government also allocated sites for voluntary agencies to build cottages according to the standard layout plans and design. Some of those cottages were then allocated to families recommended by the Government.
6.31 Only five Cottage Areas now remain, with a total population of some 3 500. These areas fall under the management responsibility of the Housing Authority. Currently, there is no plan to clear these areas unless the land concerned is needed for development purposes or affected by geotechnical problems. We have advised and encouraged Cottage Area residents to register on the Waiting List in order to increase their chance of early rehousing in public rental flats. Meanwhile, subject to the availability of housing resources, the Housing Department will continue to make available public rental flats from time to time for application by Cottage Area residents.
6.32 Against this background, we propose that the HA should adopt the following guiding principles for clearance operations in future -
|
(a) |
squatters and roof-top dwellers who are eligible for public rental housing should continue to be encouraged to register on the Waiting List. This reduces the pressure for special treatment for individual groups of squatter and so helps to avoid queue jumping; | |
|
(b) |
clearances to ensure public safety and to meet development needs should continue to be carried out, and should be planned and co-ordinated well in advance to ensure that rehousing resources are available; | |
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(c) |
we should explore the feasibility of clearing all remaining Cottage Areas, subject to the availability of rehousing resources; | |
|
(d) |
we should consider the feasibility of clearing all squatter areas on mixed lots in urban areas, subject to the availability of rehousing resources; and | |
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(e) |
we should continue to rehouse, in accordance with existing eligibility criteria, persons who are made homeless as a result of the demolition of roof-top structures. |
6.33 The Government's clearance programme will help many families to improve their living conditions. At the same time, for some families, it will also give rise to the need for temporary housing. We recognise that there is a continuing and long-term need for interim housing to accommodate clearees, and others who have no alternative accommodation but who do not qualify as yet for public rental flats.
6.34 In recent years, the Government and the HA have taken steps to improve the living conditions of THA residents. In summary, older (pre-1984) THAs will be phased out soon. The standards of the remaining, newer THAs are being improved in the short term; in the longer term, they too will go. In future, the demand for interim housing will be satisfied by making use of older public rental estates. As a supplement to this source of interim accommodation, the HA is also exploring the use of pre-fabricated structures of a new design, and the development of permanent high rise buildings for interim housing.
6.35 Apart from providing interim housing residents with a decent standard of accommodation, the HA will encourage a high turnover in tenancies. That is, the HA will plan to move eligible families in interim accommodation into public rental housing as soon as possible according to their priority on the Waiting List, but will retain the interim accommodation for use by new residents.
6.36 We support the HA's initiatives for interim accommodation, namely -
| (a) | to phase out existing, traditional THAs as soon as possible, but in the meantime, to improve their standards to provide residents with decent, hygienic accommodation; | |
| (b) | to provide interim housing in future as far as possible through the use of older public rental housing blocks on the fringe of the urban area; and | |
| (c) | to continue to examine the feasibility of other forms of interim housing. |
6.37 The Government is firmly committed to providing adequate public rental housing for those in genuine need. Adequate housing does not have to be brand new flats.
6.38 High on the public housing agenda is the need to improve the living conditions of those who are inadequately housed. To speed up the process, we propose to apply the same eligibility criteria to all prospective tenants, to minimise pre-emption by committed categories, and to restrict the grant of new tenancies, upon the death of the principal tenant, to those adult members of the deceased tenant's family who have a genuine need. We also propose that the HA should consider increasing rents gradually to more realistic but still affordable levels, while at the same time ensuring that the existing Rent Assistance Scheme continues to provide adequate assistance to families facing genuine hardship.
6.39 We will continue to encourage families who are inadequately housed to come forward and register on the Waiting List. We also highlight guiding principles for interim housing and clearances, and new initiatives to provide housing for the elderly.
10 The deficit in 1996-97 is estimated to be $0.9 billion, rising to $1.2 billion in 2000-01.
11 We propose to continue to exempt the Compassionate Rehousing, Emergency Rehousing, and junior civil service categories. (The HA has a long-standing arrangement with the Government to provide public housing for junior civil servants who do not enjoy other forms of housing benefit.) These categories pre-empt about 5% of average annual supply of public rental flats.
12 Under the HA's Rent Assistance Scheme,a household may qualify for a 50% reduction in rent if the household income is less than 50% of the relevant Waiting List income limit; the rent-to-income ratio exceeds 25%; or the household income falls between 50% and 60% of the relevant Waiting List income limit, and the rent-to-income ratio exceeds 15%.
13 In practice, tenants of new public rental flats are allocated space at the higher standard of 7 square metres per person.
14 In April 1994, the Government enacted the Bedspace Apartments Ordinance to introduce a licensing scheme to regulate the fire and building hazards of bedspace apartments. In 1998, all bedspace apartments will be required to comply with the new safety standards. Some bedspace apartments may not be able to meet the new requirements or may opt to close down. Others may be required to reduce the maximum number of lodgers who can be accommodated. We will provide public rental housing for those aged 60 or over, who qualify on social or medical grounds, or who meet the normal eligibility criteria. For those above and others who do not qualify for public rental housing, we will offer places in singleton hostels under the management of the Home Affairs Department. We will complete the construction of a multi-storey hostel in Sham Shui Po in mid-1998 to accommodate about 300 lodgers. We will also speed up the planning and construction of another hostel in Western District.