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HOUSING
years at an annual interest rate of five per cent. However, in order to alleviate the cash flow burden on the authority, the government does not require the authority actually to pay the interest in cash. The interest charge must, nonetheless, be fully accounted for and, accordingly, along with the free land provided, is reflected in the Housing Authority's balance sheet as part of the government's contribution to public housing. At March 31, 1984, the government's contribution stood at $14,750 million which included, among other subsidies, free land worth $12,009 million and $976 million in respect of interest foregone. Furthermore, the 40-year repayment period for loans means that, having regard to the declining value of money over time, the government recovers only a fraction of the real value of the housing loans.
In the 1983-4 financial year, recurrent expenditure on the Housing Authority's domestic rented properties - covering mostly management and maintenance costs - totalled $1,486 million while income from domestic rents was $1,297 million, resulting in a deficit of $189 million. This deficit arose because the very low rents on old estates were insufficient to meet management expenses and the high cost of maintenance and improvements. The Housing Authority was able to offset this loss from income derived from its non-domestic (commercial) properties which in the same period generated $734 million against expendi- ture of $375 million. Any surplus funds are used to finance the housing programme.
The Housing Authority spent $2,824 million on its capital programmes, of which $2,350 million was financed by the government (mostly loans on concessionary terms) with the balance being financed from Housing Authority funds. In addition, the Housing Authority, acting as the government's agent, spent $569 million on the construction of flats for sale under the Home Ownership Scheme.
Construction
The Housing Authority construction programme is firmly geared to achieving the target of about 215 000 flats over the next five years. This programme comprises 158 000 public rental flats, 32 000 Home Ownership flats, and another 25 000 flats built for sale under arrangements with private developers in the Private Sector Participation Scheme. During 1984, 52 building contracts worth a total of $3,580 million were let. At the end of the year, 86 contracts were in progress, and the completion of these in the next few years will provide 93 000 rental flats, 29 200 Home Ownership flats, 12 schools and 15 commercial centres. In addition, 10 temporary housing areas and one factory project containing 2 200 working units were under development.
Home Ownership Scheme
The Home Ownership Scheme (HOS) is administered by the Housing Authority with funds from the government to provide flats for sale at cost to public housing tenants and other lower middle income families who are subject to certain eligibility criteria. Since Phase I started in 1978, a total of 44 300 flats under the HOS and the related PSPS have been sold to qualified families. About 37 per cent of these families were public housing tenants who were not subject to restrictions on income and property ownership, but were required to surrender their tenancies for reallocation by the Housing Authority to other families in need of rental housing. During the year, the ceiling of the family income eligibility was raised from $6,500 to $7,500 to keep the HOS (and PSPS) flats within the reach of the target population.
A total of 14 100 flats were put up for sale in three sales exercises during the year. The first sales (Phase VB) took place in February and consisted of 3 200 HOS flats with prices
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