Hong Kong: The Facts (Housing)

Housing Policy

Housing policy in Hong Kong is currently formulated, co-ordinated and monitored by the Secretary for Transport and Housing. The Housing Department (HD) supports the Transport and Housing Bureau in dealing with all housing-related policies and matters.

The Government promulgated the Long Term Housing Strategy (LTHS) in December 2014. It has three major directions: (1) to provide more public rental housing (PRH) units and to ensure the rational use of existing resources; (2) to provide more subsidised sale flats, expand the forms of subsidised home ownership and facilitate the market circulation of existing stock; and (3) to stabilise the residential property market through steady land supply and appropriate demand-side management measures, and to promote good sales and tenancy practices for private residential properties. The Chief Executive’s 2017 Policy Address indicated that the Government will continue to increase housing supply and build a housing ladder on the basis of LTHS. In accordance with the LTHS, the Government updates the long term housing demand projection annually and presents a rolling ten-year housing supply target to capture social, economic and market changes over time, and make timely adjustments where necessary.

Based on the latest projection of housing demand in December 2017, the Government has adopted a housing supply target of 460 000 units for the ten-year period from 2018-19 to 2027-28, with a public-private split of 60:40. Accordingly, the public housing supply target is 280 000 units, comprising 200 000 PRH units and 80 000 subsidised sale flats, whereas the private housing supply target is 180 000 units.

Private Sector Housing and Consumer Protection

The private sector has an important role to play in meeting the housing needs of the community. At the end of March 2017, the number of private permanent housing amounted to about 1.5 million units. The Government publishes statistics on private housing supply in the primary market on a regular basis to enhance market transparency.

The Estate Agents Ordinance requires individuals/companies engaging in estate agency work to obtain the required licences. The Estate Agents Authority was set up in 1997 to handle the licensing work, regulate estate agency practices, and enhance the professionalism of the sector.

The Residential Properties (First-hand Sales) Ordinance and the work of the Sales of First-hand Residential Properties Authority (SRPA) have enhanced the transparency and fairness of sales in first-hand homes, strengthened consumer protection and provided a level playing field for vendors. Since the ordinance took effect in April 2013 and up to September 2017, the SRPA has conducted about 35 100 examinations on sales-related documents and about 2 840 site inspections to sales offices and show flats.

Public Housing Providers

The Hong Kong Housing Authority (HKHA) is a statutory body established in 1973 responsible for implementing the majority of Hong Kong’s public housing programmes. The Hong Kong Housing Society (HKHS) is an independent statutory organisation established in 1948 for providing specific categories of subsidised housing to help meet the housing needs of the community.

PRH

PRH is a long-established safety net for the grassroots and low-income families. As at the third quarter of 2017, about 2.15 million people (about 29 per cent of the population) lived in PRH flats while the PRH stock was about 808 000 units.

The Government will continue to assist low-income families who cannot afford private rental accommodation through PRH. The HKHA’s target is to provide the first flat offer to general applicants (i.e. family and elderly one-person applicants) at around three years on average. As at end-September 2017, there were about 152 700 general applications. The average waiting time^ for general applicants was about 4.6 years.

It is the policy of the Government and the HKHA to accord priority to general applicants over non-elderly one-person applicants in the allocation of PRH units. Towards this end, the HKHA implements the Quota and Points System (QPS) for non-elderly one-person applicants. As at end-September 2017, there were about 127 400 QPS applications. Unlike general applicants, under QPS:

  • the allocation of flats is subject to an annual quota;
  • the priority of applicants is determined by a points system;
  • the target of providing the first flat offer at around three years on average is not applicable to QPS applicants; and
  • HD will conduct regular checking on the eligibility of applicants and cancel applications which no longer fulfill the PRH eligibility criteria and applicants who did not respond to the checking requests.

The HKHA has implemented the following measures to ensure that PRH flats are allocated to people in genuine need:

  • Allocation of PRH flats to eligible general applicants in accordance with the order of registration;
  • To be eligible, applicants and their family members must not own or co-own or have an interest in any domestic property in Hong Kong. Applicants and their family members must also undergo comprehensive means tests covering both income and assets. Applicants’ family income and total net asset must not exceed prescribed limits. At the time of flat allocation, at least half of the family members included in the application must have lived in Hong Kong for seven years and all family members must be still living in Hong Kong;
  • PRH tenancies cannot be passed on automatically from one generation to the next. Upon the death or moving out of the tenant, when there is no surviving spouse in the tenancy, the tenancy may be granted to an authorised person residing in the PRH flat subject to fulfilment of the comprehensive means test (with income and asset limits under the revised Well-off Tenants Policies) and the "no-domestic-property" requirement; and
  • Households who have been living in PRH for 10 years are required to declare their income and assets on a biennial basis pursuant to the “Well-off Tenants Policies”, for determining their eligibility for PRH flats and the level of rent payable.

It has been a long-established policy of the HKHA for setting PRH rent at an affordable level. As stipulated in the Housing Ordinance, the HKHA shall conduct a rent review every two years and adjust PRH rent upwards or downwards according to the changes in the overall household income of PRH tenants as reflected by the change in the income index. PRH rent is inclusive of rates, management costs and maintenance expenses. As at end-September 2017, PRH rent ranged from $346 to $4,690, and the average rent was about $1,880 per month.

The income-based rent adjustment mechanism provides a framework that matches rental adjustments to changes in overall PRH household income, reflects tenants’ affordability and contributes to the sustainability of Hong Kong’s public housing programme.

Subsidised Home Ownership

Subsidised home ownership is one of the essential elements of the housing ladder. It serves as the first step for low to middle-income families to achieve home ownership. It also provides an opportunity for PRH tenants whose financial conditions have improved to achieve home ownership, thereby releasing their PRH units for PRH applicants. As at end-September 2017, there were about 403 700 subsidised sale flats*, mainly flats under the Home Ownership Scheme (HOS). Subsidised sale flats are subject to alienation restrictions. Owners of subsidised sale flats have to pay premium to lift the alienation restrictions before selling their flats in the open market, or from the third year onwards after the date of the first assignment, they can sell their flats through the HOS Secondary Market Scheme without paying premium.

The HKHA put up 6 874 HOS flats for pre-sale in 2014 to 2017. The first batch of a total of 2 160 flats in five development projects pre-sold in 2014 have been completed for intake. The total of 4 714 flats pre-sold in 2016 and 2017 are expected to be completed in 2018-19. As for 2018, if all sales preparation works are completed smoothly, it is expected that the HKHA can put up about 4 400 HOS flats for pre-sale in the first quarter. These flats are expected to be completed in 2018-19 to 2020-21. Besides, the HKHS put up a total of 2 008 subsidised sale flats for pre-sale from 2012 to 2016, and will soon put up a total of 620 subsidised sale flats in Tseung Kwan O and Tuen Mun for pre-sale.

Apart from the development of new HOS flats, the HKHA offers the HOS Secondary Market Scheme, under which Green Form applicants (mainly PRH tenants, but also include PRH applicants who have passed the detailed eligibility vetting) can purchase subsidised sale flats with premium unpaid. In response to the home ownership aspirations of low to middle-income families, the HKHA launched two rounds of an interim scheme in 2013 and 2015 respectively to allow buyers with White Form# (WF) status to purchase subsidised sale flats with premium unpaid. A total of around 4 000 WF buyers have successfully achieved home ownership under the scheme. The HKHA has endorsed regularising the arrangement as the WF Secondary Market Scheme with an annual quota of 2 500 from 2018.

To further strengthen the housing ladder, the HKHA launched the Green Form Subsidised Home Ownership Pilot Scheme (GSH) in 2016. Under this scheme, suitable flats among its PRH developments under construction have been selected for sale to GF applicants, with prices set at a level lower than those of HOS flats. The GSH project King Tai Court at San Po Kong was launched in October 2016, and all 857 flats were sold in February 2017. The HKHA is reviewing the effectiveness of GSH, and the review is expected to be completed in the first quarter of 2018.

Besides, on the premise that the supply of public housing will not be affected, the Government will introduce the “Starter Homes” Pilot Scheme for Hong Kong Residents (Pilot Scheme), so as to enrich the housing ladder and to provide families in different income brackets with the opportunity to become home owners. Details of the Pilot Scheme will be finalised for announcement in mid-2018.

Interim Housing

Interim housing mainly provides interim accommodation for persons affected by natural disasters or government clearance operations while waiting for PRH allocation, if they have stayed in the transit centre for three months, passed the “homeless test” and fulfilled the eligibility criteria for PRH.

Housing for Elderly People

As at end-September 2017, about 614 500 people aged 60 or above live in PRH flats of the HKHA and the HKHS, representing about 36 per cent of the elderly population in Hong Kong. The Government will continue to give elderly people in need priority access to public housing through various allocation schemes. As at end-September 2017, the average waiting time for elderly one person applicants was about 2.6 years. In support of the “ageing in place” policy of the Government, the HKHA has currently in place a series of policies and measures to address the needs of the elderly PRH applicants and sitting elderly tenants include granting priority to elderly PRH applicants and encouraging the younger generation to take care of their elderly parents by living together or in the vicinity such that they could take care of each other. Regarding building design and facilities, the HKHA will adopt universal design, carry out adaptation/modification works in PRH units and install elderly fitness facilities/equipment. When implementing certain housing policies, such as the under-occupation policy and financial assistance, the HKHA will also provide appropriate arrangements with reference to the needs of elderly.

The HKHS is operating the Senior Citizen Residence Scheme which provides purpose-built housing with integrated health care facilities on a “lease-for-life” basis to eligible senior citizens in the middle income group. There are two pilot projects (i.e. Jolly Place at Tseung Kwan O and Cheerful Court at Jordan Valley) under the Scheme, which provides a total of 576 units. The HKHS also launched the Tanner Hill project at North Point in 2015 to provide 588 units with one-stop housing and care services on a “lease-for-life” or “short-term tenancy” basis for the elderly with higher expectation and financial capability.

Squatters

The number of squatters and squatter structures has been reduced in recent years through rehousing and clearance programmes. Since December 2002, the criteria for rehousing squatters upon clearance have been relaxed. Families who have resided in 1982-registered domestic squatter structures for two years immediately preceding to the date of announcement of squatter area clearance and met the prescribed eligibility criteria for PRH will be allotted a notional PRH application number with a two-year waiting time. If they will soon be allocated with PRH flat within 12 months’ time, their application will be handled in advance.

^ Waiting time refers to the time taken between registration for PRH and the first flat offer, excluding any frozen period during the application period (e.g. when the applicant has not yet fulfilled the residence requirement; the applicant has requested to put his/her application on hold pending arrival of family members for family reunion; the applicant is imprisoned, etc). The average waiting time for general applicants (family and elderly one-person applicants) refers to the average of the waiting time of those general applicants who were housed to PRH in the past 12 months.

* Subsidised sale flats refer to those units with premium not yet paid. Hence, they are still being subsidised by the Government and subject to alienation restriction. Those units with premium paid/no need to pay premium and can be transacted in the open market are not included.

# WF applicants have to satisfy certain eligibility criteria including residence rule, and the income and asset limits set by the HKHA.

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Published by the Information Services Department,
Hong Kong Special Administrative Region Government
GovHK Website: http://www.gov.hk
Information contained in this publication may be freely used.
No acknowledgement is necessary.

Transport and Housing Bureau Home Page Address:
http://www.thb.gov.hk

December 2017


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