TNAG-1575-FCO40-2148-Housing-in-Hong-Kong-1986 — Page 14

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fees and maintenance and repair charges. The rent set under

this 15% guideline will very unlikely cause hardship to the public housing tenants, as the average rent-income ratios for new tenants of all rehousing categories in 1983/84 and 1984/85 were 12.3% and 13.5% respectively. The proposed ratio also compares favourably by reference to the ratios for public housing rents in foreign countries. Furthermore, this method of pegging rent to the tenants' median household income shields the tenant from the effects of anomalous fluctuations in the property market and economic depressions.

However, one characteristic of the median income figure is that it is positioned in the middle of a distribution of income statistics, meaning that one half of the incomes are

above and the other half are below this value. In charging a 15% of the median income, those households with an income below the median are in fact paying more than 15%. The households at the bottom of the income distribution may pay as much as 30% of their income for rent. On the contrary, those households with an income above the median will pay less than 15% of their income for rent. This phenomenon entails a discrimination against the worse-off tenants. Therefore, in the interest of social equity and in line with the social objective of public housing, I am of the opinion that those households below the median income should pay rent equivalent to 10% of the median income, while those households above it should pay rent

equivalent to 15% of it.

Subsidized housing should not be viewed as a life-long entitlement; the tenant's share of the costs of housing should be related to his earnings. I therefore endorse the proposal made by the Committee on Housing subsidy that it requires those public housing tenants, whose total household income exceeds the revised Subsidized Income Limit at the expiry of the initial ten-year residence, to pay double their existing rents. As the current median rent for these tenants are around $330, doubling the rent should not bring about