Owning one's home is an aspiration shared by many in the community. Promotion of home ownership helps to foster social stability and a sense of belonging. The Government will continue to provide a variety of subsidised home ownership schemes and loan schemes through the HKHA and the HKHS to enable eligible families to buy their own homes. The target is to achieve an overall home ownership rate of 70 per cent by 2007, compared with 53 per cent at present.

Home Ownership Scheme, Private Sector Participation Scheme and Flats for Sale Scheme

The HOS and PSPS were introduced by the HKHA in 1978 and 1979 respectively, to assist low and middle income households to purchase homes at about half the market value of comparable private sector developments at similar locations. About 297 600 flats have been sold so far to eligible households. In 2000, 5 100 flats and 6 000 flats were sold under the HOS and PSPS respectively, and the sale exercises were five times over-subscribed on average.

In 1987, the HKHS implemented the Flats for Sale Scheme (FFSS) to complement the HOS and PSPS. So far, 8 736 flats have been built.

Applicants under the HOS, PSPS and FFSS fall into two categories: Green Form and White Form. White Form applicants (mainly living in private sector housing) are subject to a domestic property restriction, a net asset limit of $700,000 and an income limit of $31,000 per month. These restrictions do not apply to Green Form applicants who are principally public rental housing tenants, residents of Temporary Housing Areas, Cottage Areas and interim housing managed by the HKHA, households displaced by the clearance of squatter areas for development, and victims of natural disasters.

Affordability is the primary consideration in determining the price of HOS, PSPS and FFSS flats. In the case of subsidised home ownership flats built by the HKHA, sale prices also reflect the Government's granting of land at reduced or nominal premium. Prices in each sale exercise represent about half of the market value of comparable private sector developments at similar locations.

The Secondary Market Scheme was established by the HKHA and the HKHS in 1997 for the resale of subsidised home ownership flats, starting from the third year after first assignment, to sitting public rental housing tenants and Green Form Certificate holders. Flat prices are freely negotiated between the parties involved, subject to the transfer of premium liability to new purchasers. Since then, 16 612 applications for sale and 13 418 applications for purchase have been received; 9 366 transactions have been completed and 7 866 public rental housing flats have been recovered.

HOS, PSPS and FFSS flat owners may sell their flats in the open market starting from the sixth year after first assignment, subject to payment of a premium.

The Sandwich Class Housing Scheme, comprising a Main Scheme and a Loan Scheme and administered by the HKHS, was introduced in 1993 to help middle income families to buy their own homes.

The Main Scheme involved the construction of flats which were sold to eligible applicants at discounted prices subject to a five-year resale restriction. Land was granted to the HKHS on concessionary terms but all other development costs were borne by the HKHS. So far, 8 900 flats have been completed. As property prices have dropped substantially and many private sector flats are now within the reach of middle income families, the Main Scheme has been suspended since October 1998.

The Loan Scheme provided subsidised loans to eligible households to enable them to buy their own homes in the private sector; 5 700 loans amounting to $2.7 billion were granted. The Loan Scheme was abolished in March 1998 following a review of subsidised housing loan schemes. Eligible households may continue to obtain loans under the Home Starter Loan Scheme (HSLS) and the HPLS.

The HPLS was introduced by the HKHA in 1988 to assist low income households to purchase flats in the private sector. Eligible households are offered an interest-free loan of up to $800,000, or a monthly mortgage subsidy of up to $5,100 for 48 months, to purchase their own homes. So far, 39 718 loans and 2 076 subsidies have been granted. A quota of 7 000 loans (5 500 for Green Form and 1 500 for White Form applicants) has been set for 2000-01.

The HSLS was launched in April 1998 by the HKHS on behalf of the Government to help families to buy their own homes for the first time. About 30 000 families will benefit during the period 1998-99 to 2001-02. The scheme has been extended since December 1999 to cover single persons under 60 years of age. Successful applicants with families receive a low-interest loan of up to $600,000 ($300,000 in the case of single persons) or 30 per cent of the property price, whichever is lower. Up to the end of 2000, about 17 689 loans were drawn down, including 856 loans for single persons.

The Tenants Purchase Scheme, announced in December 1997, provides opportunity for at least 250 000 households living in public rental housing to buy their flats at reasonable and affordable prices over a 10-year period up to 2007. This arrangement will make a significant contribution to achieving the target of 70 per cent home ownership in Hong Kong by 2007.

Phases 1 and 2 of the scheme, involving 54 000 flats, were launched in January 1998 and March 1999 respectively, and so far 38 600 (71.5 per cent) sitting tenants purchased their own flats. Phase 3, involving 27 400 flats, was launched in January 2000. About 19 330 households (70.5 per cent) have indicated interest in buying, and 19 130 households (69.8 per cent) have so far bought their own flats.

In 1999, the HSLS was extended to cover single persons. To cater for increasing demand, the HKHA has, since December 1999, also allowed White Form singleton applicants to buy HOS and PSPS flats or to join the HPLS. So far, 2 900 single persons have successfully purchased flats under the HOS and PSPS, and 355 have obtained HPLS loans.

The Mortgage Subsidy Scheme was implemented in September 1998 to promote home ownership among tenants affected by the HKHA's Comprehensive Redevelopment Programme and households affected by Cottage Area clearance exercises. Under the scheme, eligible applicants buying HOS or PSPS flats are given a mortgage subsidy of up to $162,000 over a period of six years. So far, 2 600 households have bought homes with this subsidy.

The Buy or Rent Option was launched by the HKHA in July 1999 to allow prospective public rental housing tenants, who are eligible for flat allocation within one year, the alternative option of owning their own homes. This initiative is also open to tenants affected by redevelopment and clearances as well as eligible junior civil servants. As an alternative, an eligible purchaser may opt to receive a mortgage subsidy of up to $162,000 over a period of six years. So far, 2 080 flats have been sold, including about 1 400 households receiving mortgage subsidies.

Replacing a Proportion of Subsidised Home Ownership Flat Production with Loan Finance

To allow a wider choice to prospective home buyers, to make better use of public resources and to respond more effectively to short-term fluctuations in housing demand, the Government has embarked on a partial shift in the provision of housing assistance from the conventional 'bricks and mortar' approach to the use of housing loans to purchase flats in the private sector. Agreement was reached with the HKHA to reduce subsidised home ownership flat production by 4 000, 5 000, 6 000 and 6 000 units respectively in each of the four years from 2003-04 to 2006-07. This programme will be reviewed and rolled forward annually. Housing loans will be provided to eligible households to replace the reduction in flat production.