Review of Hong Kong public housing resources: Better utilisation of - - PowerPoint PPT Presentation

5 May 2017

Review of Hong Kong public housing resources:

Better utilisation of resources, better home for all

Background

Prices and rents of private domestic units have continued to rise, far exceeding the affordability of the general public. The waiting time for allocation of public rental housing (PRH) has also kept extending The current housing problems have seriously affected the livelihood

• f Hong Kong people, and also social harmony and stability, as well

as the long-term competitiveness of Hong Kong PRH may be the only avenue for the grassroots to have adequate housing

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Domestic households by type of housing in 2016 (about 2.51 million households in Hong Kong)

Note: Others including temporary housing and non-domestic housing Source: Census and Statistics Department

Public Rental Housing 30.4% Subsidised Sale Flats 15.3% Private Housing 53.0% Others 1.3%

Public Housing 45.7%

Background

Public housing includes PRH and subsidised sale flats (SSF, which are mainly Home Ownership Scheme, HOS)

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To review the existing public housing policy, relevant measures and arrangements under the Hong Kong Housing Authority (HA), including

• PRH – flat allocation, domestic rent policy, well-off tenants policies,

transfer schemes, redevelopment programme

• SSF – flat allocation and subsidy arrangements, alienation restrictions,

premium payment arrangement To explore how to optimise the existing public housing resources to take better care of people’s housing needs

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Objectives

Literature review – including government documents, academic journals, newspapers and magazines, and overseas experiences Interviews – to collect views from government officials, District Councilors, and concern groups To summarise, discuss and analyse information collected, and propose recommendations

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Methodology

Subsidised housing programmes launched by the Hong Kong Housing Society are not covered Private property which has implications on the development of Hong Kong’s

property market is not included Housing issue is not just a matter of the number and allocation of flats, but should also take into account the housing quality. Ancillary community facilities, transportation, regional economy, and employment opportunities, as well as public space design would affect people’s living quality. These topics are to be further explored

Limitations

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Current situation

Due to the changes in living conditions or special circumstances, some PRH tenants may have difficulties in continuously living in the existing flats Subject to available resources, HA makes arrangements to cater for tenants’ needs for flat transfer under different transfer schemes From 2011/12 to 2015/16, about 6,300 successful transfer cases per year on average The acute shortage of PRH resources, i.e. limited number of flats for allocation, and application requirements for transfer, makes flat transfer absolutely difficult for tenants in need

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(1) Take care of PRH tenants’ need for flat transfer

Recommendation

Establish an online platform enabling flat-for-flat swap among tenants in need

Implement the PRH Swap Scheme and merge together with existing transfer schemes Housing Department may make matching arrangements based on tenants’ preferences and reasons for application, with priority accorded to those in urgent needs, thereby minimising opportunities for undergoing unlawful acts among tenants

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(1) Take care of PRH tenants’ need for flat transfer (con’t)

Provide tenants in need more transfer options and greater chances of successful transfer. Tenants will ‘Have options and transfer successfully’, thereby improving the efficiency that the flat contributes to meeting tenant’ housing needs Flats earmarked for transfer can be released to expedite flat allocation to PRH applicants, so that public housing can be secured as early as possible

• Assuming that 1% of the tenants are interested and succeeded in flat swapping, the

number of beneficiary households would amount to 7,600 a year

• Assuming that the PRH Swap Scheme reduced half of the flats earmarked for transfer

schemes, 3,000 more flats could be allocated to applicants awaiting PRH

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Desired outcome

(1) Take care of PRH tenants’ need for flat transfer (con’t)

Applicants eligible for PRH allocation and PRH tenants are eligible to apply for HOS flats with Green Form (GF) As the price of HOS flats is linked to the price of private domestic flats which has been rising, PRH tenants can hardly afford to buy HOS flats at the current standardised discount rate 'Green Form Subsidised Home Ownership Pilot Scheme' (GSH) helps GF applicants own their homes, but it reduces the number of PRH units and affects the waiting time for PRH

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Current situation

(2) Assist PRH tenants to buy HOS flats

Amalgamate GSH with HOS, and discount rates for sale of HOS flats are set according to the income and assets of GF applicants Reference to the pricing arrangement of ‘Sale of Home Ownership Scheme Flats 2017’ :

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Recommendation

Household monthly income limit Asset limit Proposed discount rate Households with higher income and asset 30% $31,000 to $36,000 $1,500,000 40% (1) $31,000 $1,300,000 50% (2)

Note: The limits are applicable to households with two or more members. (1) For applicants with more than $1.5 million in asset, only a discount of 30% would be offered. (2) For applicants with more than $1.3 million in asset, only a discount of 40% would be offered.

Offer concession rates according to GF applicants’ financial resources to enable them to buy HOS flats

(2) Assist PRH tenants to buy HOS flats (con’t)

Reinforcing the housing ladder, and promoting the upward mobility of GF applicants 'One-for-one’, to reallocate PRH units recovered to applicants

• n the waiting list

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Desired outcomes

(2) Assist PRH tenants to buy HOS flats (con’t)

The Housing Ordinance stipulates that SSF with unpaid land premium cannot be let, sold or assigned in the open market As at end of March 2016, there were about 270,000 HOS flats with unpaid land premium. The flats cannot be let even left idle 'Premium Loan Insurance Scheme' launched by the Hong Kong Mortgage Corporation Limited seems to be inadequate, thus received a lukewarm response

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Current situation

(3) Assist eligible PRH applicants to rent flats

Allow SSF owners with unpaid land premium to let their flats freely to enable eligible PRH applicants to spend less on rent To amend relevant laws and regulations to allow owners with unpaid land premium to rent out their flats, but they have to share the rental income with HA based on the proportion of unpaid land premium HA may subsidise eligible PRH applicants to rent such flats with the shared rental income

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Recommendation

(3) Assist eligible PRH applicants to rent flats (con’t)

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Assuming that the monthly rent of the HOS flat is $10,000, and the proportion of unpaid land premium is 30%

Renting the unit to eligible PRH applicants

Example

Owner’s rental income: $7,000 Tenants’ rental expense: $7,000 HA’s rental income: $0

(3) Assist eligible PRH applicants to rent flats (con’t)

Owners can have more flexibility in renting out idle flats with premium unpaid and receive a rental income Increase the supply of rental units in the market which relieves rental pressure Eligible PRH applicants may enjoy lower rent Helps improve HA’s financial position

• Assuming that the vacancy rate of HOS flats with premium unpaid is 4% and half of

the owners are interested in renting out their flats, the supply of rental units would be increased by about 5,400

• If each owner pays $3,000 to HA per month, HA would be able to share some $160

million rental income a year

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Desired Outcome

(3) Assist eligible PRH applicants to rent flats (con’t)

While property prices are soaring, owners can hardly ‘chase after’ and pay the huge amount of land premium in one go The existing premium payment arrangement limits the circulation of flats with premium unpaid in the open market It is also difficult for the Government to recover housing subsidy for further deployment

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Current situation

(4) Expedite housing subsidy recovery for more effective deployment

Allow SSF owners to pay the land premium by instalments to enable the Government to recover housing subsidy Pay the land premium by instalments at the market value To encourage owners to pay back the premium earlier, the Government may provide a time-limited cap on the repayment (e.g. 10 years), which allows owners to pay the premium at the value once the premium assessment is confirmed or at the market value in later instalments

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Recommendation

(4) Expedite housing subsidy recovery for more effective deployment (con’t)

Example

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Assuming that the proportion of unpaid land premium is 30%

Instalment Time of payment Market value Instalment arrangements % of paid premium 1st Jan 2018 $5 million $5 million x 5% = $250,000 75% 2nd Mar 2022 $6 million $5 million x 5% = $250,000 80% 3rd Jun 2026 $4.5 million $4.5 million x 10% = $450,000 90% 4th Sep 2031 $7 million $7 million x 5% = $350,000 95% 5th Apr 2037 $8 million $8 million x 5% = $400,000 100%

Validity period

• f the cap on

repayment

(4) Expedite housing subsidy recovery for more effective deployment (con’t)

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Desired Outcome

(4) Expedite housing subsidy recovery for more effective deployment (con’t)

Owners can flexibly decide when and how much to pay based on the market condition and their financial ability HA can gradually recover housing subsidy for the future development of public housing In the long run, it enhances the circulation of flats with paid premium in the open market

• Assuming that one-tenth of the owners of HOS flats with unpaid premium would

complete paying the land premium in the next 20 years and the amount of land premium is $1 million for each flat, HA would get back about an additional $1.3 billion a year

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Overview of the recommendations

Recommendation Problems to be addressed Desired outcome

Establish an online platform enabling flat- for-flat swap among tenants in need  PRH tenants find it difficult to be successfully transferred

• The existing PRH resources and units for

allocation are in acute shortage

• The existing transfer schemes set various

restrictions

• The implementation of existing transfer

schemes is restricted and cannot well cater for tenants’ needs

• Increase the option and chance of

successful transfer for tenants with transfer needs

• Allocate the flats earmarked for

transfer to PRH applicants and shorten the waiting time for PRH Offer concession rates according to GF applicants’ financial resources to enable them to buy HOS flats  PRH tenants can hardly afford to buy HOS flats

• The price of HOS flats is linked to the price of

private flats which has been rising sharply. PRH tenants can hardly afford to buy HOS flats under the current price-setting mechanism

• Ensure assistance is provided

based on the economic conditions of GF applicants, and assist them to buy their own homes; ‘One-for-one’, free up PRH resources for the PRH applicants

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Recommendation Problems to be addressed Desired outcome

Allow SSF owners with unpaid land premium to let their flats freely to enable eligible PRH applicants to spend less

• n rent

 Turnover of flats with premium unpaid is low

• Idle SSF with premium unpaid cannot be let,

resulting in the ineffective use of the housing resources

• Owners can rent out the vacant flats
• Increase the supply of rental units

which relieves rental pressure

• Eligible PRH applicants enjoy paying

less on rent

• Helps improve HA’s financial position

Allow SSF owners to pay the land premium by instalments to enable the Government to recover housing subsidy  Owners find it difficult to pay the huge amount of land premium in a lump sum

• The amount of land premium increases amid

the surge in property prices

• The current premium payment system

restricts the circulation of flats with unpaid land premium in the open market, and the Government can hardly recover housing subsidy, resulting in the ineffective use of housing resources

• Owners can flexibly decide when to

pay and the amount of payment

• The Government can gradually get

back the housing subsidy for the development of public housing

• Enhances the circulation of flats with

paid premium in the open market in the long run

Overview of the recommendations (con’t)

Housing issues are related to land supply and planning, as well as transportation, the provision of community facilities, etc. The Government should actively consult various stakeholders and balance the diverse interests of different groups of people in society, so as to take better care of people’s housing needs The top priority of the Government is to address the housing needs of the grassroots, especially those having a heavy financial burden of rented accommodation or being inadequately-housed while awaiting PRH flat allocation. We need to put in concerted efforts to optimise the existing public housing resources so people can have a better home

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Concluding remarks

Thank you!

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Bauhinia’s Housing Resources Allocation Webpage: http://hra.bauhinia.org