ENG-1979 — Page 138

HOUSING AND LAND

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could not afford the prices prevailing on the open market. After a year's careful planning, a high-level working party chaired by the Financial Secretary was able to report that sites had been earmarked for some 42,000 flats to be built in phases up to 1986; that they would be sold on a non-profit-making basis; that mortgages would be available on assisted terms; and that sales of flats would be restricted to two distinct groups: public housing tenants who surrendered their low-rent flats and families in the private sector with a combined monthly income not in excess of $3,500. A number of other ground rules were established to ensure that only people for whom the scheme was designed were able to qualify.

The first phase got under way in 1977 when the Housing Authority accepted respon- sibility for designing, developing, marketing and managing the flats. Under the scheme, flats are built to standards comparable with good private developments, have two or three bedrooms, and a net area ranging between 35 and 65 square metres. All costs are covered by a Home Ownership Fund set up by the government. But, apart from the initial develop- ment expenses, the scheme is planned to be virtually self-financing through proceeds from flats sold at prices set to cover the market cost of land, design, construction and marketing

expenses.

Flats in Phase I were sold for prices ranging from about $81,000 to $166,000 - well below market levels. Not surprisingly, almost 36,000 applications were received for the 8,373 flats available at six sites located in both urban and semi-rural areas. Ballots were held to provide an equal number of successful applicants from each category, who were then thoroughly vetted to ensure they qualified for the scheme. As a result of these investigations, a number of applicants were disqualified or withdrew.

Applicants who passed their interviews were invited to select flats in their order of priority, at which time they made a minimum down payment of 10 per cent of the purchase price. Conveyancing formalities were completed by the Registrar General's Department for a nominal fee, but purchasers were required to pay the normal stamp duty and land registra- tion fee. A number of leading banks and financial institutions offered special mortgage terms. These entitled first-phase buyers to obtain loans of up to 90 per cent of the purchase price repayable over 15 years, at interest rates fixed between 71⁄2 and nine per cent per annum for the first five years. To prevent profit-taking, purchasers are not allowed to sell their flat within the first five years, although the Housing Authority reserves the right to repurchase at the original price.

In the event, almost half the Phase I flats were bought by tenants who agreed to give up their public housing flats. It is appropriate in this silver jubilee year that some of the new home owners started out as tenants when Hong Kong's public housing programme came into being in 1954.

As a supplement to the Home Ownership Scheme, the government invited private developers to produce similar flats for sale at fixed prices to applicants processed by the Housing Authority. Flats in the first two private sector participation scheme projects – a 1,000-flat project at Tuen Mun New Town and a 506-flat project at Yau Tong - were sold towards the end of the year; and the tender for a third 768-flat project was awarded at the end of the year.

Production of the next phase of Home Ownership Scheme flats is progressing well, with planning at an advanced stage for projects coming on stream within five years. The next batch of flats will be sold in early 1980. After selling the Phase I flats, the government reassessed the household income limit to take into account the changing economic condi- tions in the past two years. As a result, the limit was raised from $3,500 to $5,000 a month.