HONG KONG 2004 - Housing

Under the new policy framework, the provision of assistance to those in genuine need continues to lie at the heart of the Government's housing policy. The Government ensures that all those who cannot afford adequate accommodation in the private market have access to subsidised PRH. It is committed to maintaining the average waiting time for PRH at around three years and ensuring that there is an adequate supply of PRH through a rolling construction programme run by the HKHA. The actual quantum of PRH units to be built is adjusted regularly to take account of the housing demand of low-income families and the turnover in tenancies.

To ensure cost-effectiveness in the delivery of public housing, the HKHA has reviewed the design standards and finishes for new public rental housing by supporting the concept of a 'functional and cost-effective' design. The revised design concept has resulted in substantial reductions in construction costs for new public housing development projects.

At present, about 2 136 100 people or 31 per cent of Hong Kong's population live in public rental housing estates of the HKHA or the Hong Kong Housing Society³. At year-end, there were 92 560 households on the waiting list for PRH and the average waiting time for PRH was about 1.8 years.

The affordability of tenants is the prime factor in determining rent levels of public rental flats. Other factors taken into consideration include estate value, maintenance and management charges, rates and general household incomes. At present, public housing rents are inclusive of rates and management and maintenance expenses. Public housing tenants pay, on average, 54 per cent of the assessed market rent (inclusive of rates) for the flats they live in.

In 2002, two PRH tenants applied for a judicial review of the HKHA's decisions to defer rent reviews. The Court of First Instance ruled in favour of the tenants in July, 2003. The HKHA subsequently lodged appeals against the Court's ruling and in November 2004, the Court of Appeal allowed the HKHA's appeals by a unanimous decision. The two PRH tenants subsequently applied to the Court of Final Appeal for grant of leave to appeal. Leave was granted and the case will be heard in October 2005.

The judicial review cases underline the importance of identifying an alternative rent adjustment mechanism that is more viable and helps promote the long-term sustainability of the public rental housing programme. In this connection, the HKHA has set up an ad hoc committee to undertake a comprehensive review of its domestic rent policy. This committee will consult the public on its initial findings before drawing up recommendations on how the current domestic rent policy is to be improved.

The Rent Assistance Scheme was introduced in 1992 by the HKHA to provide assistance to public housing tenants facing temporary financial hardship. Eligible tenants are offered a 50 per cent rent reduction. To assist more needy families, the HKHA revised the scheme in October 2002 and the eligibility criteria for elderly households were relaxed. Tenants affected by redevelopment are also allowed to apply for rent assistance immediately upon rehousing. As at end 2004, 25 931 households have benefited from this scheme.

Better-off tenants are required to pay higher rents. At the end of December 2004, there were 16 538 households paying higher rents. The subsidy saved through charging under this scheme amounted to $172 million in 2004. In addition, tenants living in estates for more than 10 years with both household income and assets exceeding the prescribed limits, or choosing not to declare household assets, are required to move out. In 2004, some 867 better-off tenants, including 348 households which acquired their own flats under the HOS, the Private Sector Participation Scheme (PSPS) or the HALS, returned their public rental housing flats to the HKHA.

In 2004, 32 840 rental flats were allocated by the HKHA and the HKHS to various categories of applicants. Of these, 1 635 were new and 19 205 refurbished: 70.44 per cent were allocated to waiting list applicants, 3.47 per cent to tenants affected by the HKHA's Comprehensive Redevelopment Programme, 1.27 per cent to families affected by clearances, 1.68 per cent to junior civil servants, 23.15 per cent to tenants sitting for transfers including overcrowding relief, and the remainder to victims of fire and natural disasters and compassionate cases recommended by the Social Welfare Department.

Flats are allocated in accordance with the order of registration and applicants' choices of district. Applicants are required to satisfy comprehensive means tests (covering income and assets), not to own any domestic property and to meet the residency rule in Hong Kong before being admitted into public rental housing. To speed up the letting of some less popular flats, the HKHA launched the Express Flat Allocation Scheme and invited all eligible applicants on the waiting list to select a flat from among the vacant flats with prolonged vacancy periods in all districts. During the year, 1 260 households were successfully rehoused under this scheme.