Hong Kong Builder
HOUSING
General Problems and Policies
by
W. H. Owen, B.Sc. Tech.... A.R.I.B.A., A.M.T.P.I.
Mr. W. H. Owen, who is the Town Planning Advisor to the Public Works Department, Hong Kong, in 1939 was granted an award from the Carnegie Corporation Trust Fund to undertake a refresher course in Town Plan- ning and Housing. As a result of his studies, Mr. Owen wrote a report from which the article below has been abstracted.
For many years now public-minded citizens of the Colony have been agitating for the alleviation of the ap- palling overcrowded condition among Hong Kong slum tenements. While there is no denying the pressing neces- sity for reforms, it is difficult for the layman to conceive of the difficulties which confront the local authorities in their efforts in this direction. We hope that this part "of Mr. Owen's report will engender a deeper appreciation of the problems which confront, and the difficulties which obstruct, Government's actions towards reform, and show why the rate of improvement in the past has been, and must necessarily in the future, be slow.
In future issues we hope to present in this publication various other aspects of the problem.
The Editor.
From a general point of view housing is an integral part of town planning and embraces all kinds of housing from palaces to cottages. Prior to the war of 1914-1918, the provision of houses of all kinds was almost entirely left to private enterprise. The acute shortage resulting from that war led to action being taken by the govern- ments of most countries. Private enterprise found it unprofitable to build small houses to let at rents within the means of the working classes and the work had to be undertaken by local authorities with aid from the State. In its political aspect town planning involves control by authority of development by private enterprise. With official housing activities, however, the local authority fills the dual role of town planning authority, and proper- ty owner and manager, with special powers (and possibly privileges) as a property owner. In this report I am dealing with official housing only, that is, with the ques- tion of the provision of low rented working class houses, by, or through the agency of the local authority. Al- though town planning principles still apply, I am con- cerned principally with the problems of the improvement of the standards of working class dwellings by slum clearance and the provision of houses at rents within the means of the working classes. While the meaning of the term "working class houses" is generally understood, for legal purposes a clearer definition is required. In Eng land the term implies houses of a rental value not ex- ceeding £26 per annum (£40 in London) and normally suited to the needs of the working classes. As, in work ing class houses, let on a weekly basis, rates are included in rent, the above figures are gross rentals. In other countries a similar definition is possible, with the figures adapted to local circumstances.
Basically the housing problem is one of economics. In practically every country in the world the lower paid worker cannot afford the rent for a house of recognised standards, which would give a rate of interest satisfac- tory to private enterprise. With private enterprise the provision of houses is governed by the profit motive. The provision of houses by the local authority or the State, is undertaken as a social obligation and therefore
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the question of profit does not count to the same extent. Authority is prepared to work at a lower rate of interest than would be acceptable to private enterprise, and should circumstances warrant it, to work at no interest or even at a loss.
The broad economic problem of official housing can be very simply illustrated by considering the case of a local authority which finds housing within its area far below acceptable standards and overcrowding prevalent. Private enterprise cannot or will not do anything to alleviate the situation so the responsibility is thrust onto the local authority. If and when the annual ac- counts show a surplus balance, that balance is usually invested, and the interest added to the city's annual revenue. If the provision of housing is likely to show a normal rate of interest, then the balance can be invested in housing. If housing is likely to show no interest or interest lower than that from normal investments, then the loss in interest can be counted as the cost of housing as a social service, but it is a loss which does not involve raising additional revenue to meet it. If however, rents from housing are likely to be less than normal main- tenance and management costs, the difference must be found either by reducing some existing item of expen- diture or by raising additional revenue. Usually surplus balances are so small that they would only provide a small fraction of the capital required for housing. If circumstances are favourable rates can be increased to an extent sufficient to provide all the necessary capital outlay and annual charges, but rarely, if ever are such favourable circumstances to be found. Failing this the local authority must have recourse to borrowing and raise the rates sufficiently to provide for interest and amortisation charges on the loan, and to cover any losses due to excess of maintenance and management costs over rent receipts. In many cases, however, rates are already so high that local authorities are reluctant to increase them to such an extent, and it is to meet such circumstances that State, aid is granted. Here it may be stated that such circumstances are common to practically every large European town.
To meet the circumstances described in the previous paragraph, State aid may take a number of forms. In England it first took the form of paying all costs in ex- cess of the product of a penny on the rates. In practice this relieved the local authorities of all economic respon- sibility and proved so costly and so open to abuse that it very soon had to be stopped. Since then policy has varied in accordance with the leanings of the political party in power. Labour policy has been to encourage local authorities to be directly responsible for housing; conservative policy has favoured housing through private enterprise. Assistance has been provided by granting a fixed sum towards the costs of a house of specified type or by providing a fixed annual sum by way of rent over a given number of years. In the case of local authorities, the subsidy has only been granted in the case of houses built to let, but it has been granted to private enterprise whether the house has been built to sell or to let. To local authorities the subsidy is now only granted on houses erected for the purpose of slum clearance. Another method of assistance is to grant loans at low rates of interest, either to local authorities or to recognised building societies.
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