ENG-1992 — Page 206

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HOUSING

redevelopment programme completed in 1991, a total of over 500 blocks involving some 720 000 families will be cleared by 2001.

Rent Policy

Despite increasing operating and maintenance costs, rents for domestic premises in public housing estates have been maintained at low levels. This has been possible as a result of government subsidies in the form of free land and average low interest rates.

To meet the demand for more spacious allocation, the Ad Hoc Committee to Review Domestic Rent Policy and Allocation Standards recommended in 1991 that in future, upon their moving into public housing, tenants could choose to live at the minimum internal floor area allocation standard of seven square metres per person with the median rent-income ratio not exceeding 18.5 per cent, or at the current minimum standard of 5.5 square metres per person with the income ratio not exceeding 15 per cent. Present rents are $41.8 per square metre for the newest urban estates and $23.1 for the newest New Territories estates.

On average, public housing tenants pay about seven per cent of their income on rent. Rents are reviewed every two years and adjusted to take account of rate increases, maintenance and other costs, estate values in terms of location, facilities and services provided, and also the tenants' ability to pay.

Owing to the very low rents in old estates where maintenance and improvement costs are high, there is an overall deficit in the Housing Authority's estate working account for domestic properties.

Home Ownership Scheme

More flexible purchase arrangements were introduced for the Home Ownership Scheme (HOS) during the year, allowing buyers to start paying their mortgages before occupation of their flats in return for a discount in the price and about 29 per cent of purchasers chose these immediate mortgage terms. The Home Ownership Scheme was established in the 1970s to provide flats for sale at prices below market value to lower middle income families and housing tenants.

Private sector applicants for these flats may not own domestic property and are subject to a household income limit of $18,000 per month. These restrictions, however, do not apply to public housing tenants, residents of temporary housing areas and cottage areas managed by the authority, households displaced by clearance of squatter areas for development, natural disaster victims and junior civil servants.

Since the scheme started in 1978, a total of 172 944 flats, including 55 984 produced under the complementary Private Sector Participation Scheme (PSPS) have been sold to eligible families. About 55 per cent of these families were public housing tenants who were required to surrender their rental flats to the authority on obtaining HOS flats.

As an encouragement, public housing tenants are accorded higher priority than private sector applicants in selecting HOS flats. This incentive is also extended to prospective tenants, so that more rental flats will be available for applicants in greater need.

In return for the authority's indemnity against loss in case of default, favourable mortgage terms are provided by 50 financial institutions for the purchase of HOS and PSPS flats. The guarantee enables purchasers to borrow between 90 and 95 per cent of the flat price, with repayment periods of up to 20 years.